Improving Supply Chain Strategies towards Mitigating the Effect of Crude Oil Theft and Pipeline Vandalism in the Nigerian Oil and Gas Industry: A Case Study of the Nigerian National Petroleum Corporation (NNPC)

Generically, SCM may be said to include all activities carried out to ensure proper functioning of the supply chain. The activities included in proper management of a supply chain broadly include logistics activities, planning and control of the flow of information and materials in a firm, management of relationships with other organizations and government intervention, However, crude oil theft and pipeline vandalism are established products supply chain disruptors in Nigeria which are rendering the task of running an efficient petroleum supply chain onerous. This paper aims to establish the importance of effective supply chain strategies for companies in the oil and gas industry with special focus on the Nigerian oil and gas sector and the strategies by which the state oil and gas corporation in this sector may mitigate disruptions to its supply chain. This study investigates the enhancement of supply chain strategies towards meeting the challenge of crude oil theft and pipeline vandalism, using the Nigerian National Corporation (NNPC) as a case study. Based on this study, data were collected from two sources: A summary of incident reports obtained from NNPC and an interview with personnel in the PPMC Department. Incident report refers to a report produced when accidents such as equipment failure, injury, loss of life, or fire occur at the work site. Content analysis is utilized to evaluate data obtained from interview responses, CBN financial stability reports, NDIC annual reports, circulars, banking supervision reports and implementation guidelines. The study found out that NNPC should endeavor to sustain its value chain and ward of pipeline vandals and crude oil thieves by engaging in community partnership, detailing security outfits to ensure its pipelines’ right of way and bridging. Concluded that the oil supply chain of the Nigerian National Petroleum Corporation has been plagued by disruptions in the form of crude oil theft and pipeline vandalism which has had debilitating effects on its value.

Asset Integrity Management in Mitigating Oil and Gas Pipeline Vandalism in the Niger Delta Region—Deep Burial Solution

Pipelines, as means of transportation of water and hydrocarbon have been considered “effective, safe and reliable”. Over the years, pipeline failures in Niger Delta region of Nigeria have resulted in loss of lives, water pollution, soil contamination, air pollution, destruction of infrastructures and aquatic lives, and other losses. The study area, Niger Delta region is located on Latitude 4°50' 00"N, longitude 6°00'00"E and comprised of nine coastal states of Nigeria (about 70,000 km2). Failure data were collected using: Questionnaires administered to experienced pipeline engineers in the International oil and gas companies (IOCs), Personnel interviews, and reports from the Department of Petroleum Resources, Nigerian National Petroleum Corporation (NNPC). This study assessed the strategies employed by four IOCs to mitigate pipeline failures in the process of asset integrity management. Design and construction methods detailing pipelines laying to infiltration discouraging-depth were studied. The results obtained showed that vandalism is presently the major cause of pipeline failures. Deep burial solution was therefore explored as a vandalism mitigation approach and its cost of implementation for a typical Φ20"× 15 km trunkline in the region showed 9.627% (≈809.3 million Naira) rise compared to the normal burial option, and this difference accrued mainly from equipment and personnel cost. This is a paltry sum compared to the huge losses due to vandalism. Finally, this study posits that the available regulatory framework is now inadequate for pipeline design, construction, and operations due to this challenge and requires urgent amendment in favour of deep burial option.