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Irina Slav
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.
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Last November, Nigeria’s oil production hit the highest in 2024, at 1.7 million barrels daily. The country’s government has a stated ambition to boost that considerably, by some 1 million barrels daily within two years. But there is a problem it needs to solve first: pipeline sabotage.
Earlier this week, an explosion rocked the Trans-Niger Pipeline, one of the main conduits for crude pumped in the Niger Delta, which carries it to the Bonny export terminal. The explosion sparked a massive fire at a section of the pipeline and the flow of oil had to be rerouted, which was done promptly. The investigation on the blast is ongoing, but a spokesman for Renaissance Group, the owner of the pipeline, said there were suspicions of arson.
The Trans-Niger Pipeline has a capacity of 450,000 barrels daily. That’s 15% of Nigeria’s total oil export capacity—and that makes the explosion an even bigger deal than it might have seemed initially. Because successive Nigerian governments have been trying for years to stop the theft and sabotage of pipelines as a means of reviving the industry. Instead, Big Oil has shrunk its presence in Africa’s biggest producer, in large part because of the thefts and sabotage. And Nigeria needs fresh oil investments to make that production boost happen.
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“This is a blow to the Tinubu government’s recent successes on oil output, gains driven in part by improved security measures,” Clementine Wallop, director for sub-Saharan Africa at political-risk consultant Horizon Engage, told Bloomberg. “It is also a very difficult investment signal during a period where the government seemed to be turning a corner on energy.”
The explosion comes barely a month after the chief executive of the Nigerian Upstream Petroleum Regulatory Commission declared that Nigeria was “more ready for business than ever,” adding that the federal government was committed to regulatory certainty, investment-friendly policies, and global competitiveness. Yet infrastructure security continues to be a problem, and that could very well derail the rest of the government efforts.
Last year, one local oil company and the government estimated that Nigeria loses between 200,000 barrels and 400,000 barrels daily to oil theft. These are dramatic figures because they translate into billions of lost income for the state—and into hesitancy among international oil operators to return to, or enter, Nigeria.
There are more dramatic figures, too. Back in 2022, the Trans-Niger Pipeline was literally perforated by illegal connections, with the head of the Nigerian National Petroleum Company’s chief reporting that in “less than 200 kilometres we had 295 illegal connections.” As a result, the country’s oil output at one point dipped below 1 million barrels daily – from as much as 1.8 million barrels daily.
Since then, efforts have been made to eliminate theft and they have been partially successful, with losses much lower than they were in 2022. Yet that may not be enough to bring in more investment—because that pipeline blast this week was not the work of oil thieves.
Nigerian daily Vanguard reported, following the explosion, that it could be the work of militant groups active in the Niger Delta. The militants have threatened to attack oil infrastructure in the Rivers state amid an ongoing political crisis between the state and the federal government over federal money allocation to Rivers, the report said.
The issue of federal oil money distribution to the communities in Nigeria’s oil heartland has long been a bone of contention between the central government and those same communities—and it has been linked to militant activity by radical groups such as the Niger Delta Avengers, who were active in the Delta area about a decade ago, targeting oil infrastructure as a means of sending their message about the injustice of oil money distribution. Disgruntlement among the Delta communities also led to the sprouting of other militant groups that also attacked pipelines and export terminals until the government cut a deal with them.
“The approach Renaissance takes will be crucial in setting the tone around how the above ground challenges in Nigeria’s oil and gas sector will be resolved by the indigenous operators,” the head of West African upstream research at Wood Mackenzie, Mansur Mohammed, told Bloomberg. Indeed, the company’s actions now will be watched closely by companies that may be willing to enter or boost their presence in Nigeria.
For now, the signs appear to be positive. Renaissance, which bought the Trans-Niger Pipeline from Shell, was quick in rerouting the flow of oil and has stopped short of declaring force majeure on exports from the Bonny terminal. Now, it’s up to the government to work with the industry and demonstrate that it can put an end to the sabotage and the theft. And they’d do well to keep an eye on gas infrastructure as well—criminals are targeting gas pipelines, too, now, as security gets boosted around oil infrastructure.
By Irina Slav for Oilprice
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.
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