ABUJA, Nigeria (Dow Jones)
The Nigerian government has awarded a contract for the repair of a major pipeline that supplies crude oil to two of the nation's refineries, a year after Niger Delta militants damaged it, the Minister of Energy said Thursday.
Edmund Daukoru also said spending in Nigeria's oil and gas industry was forecast to be $20 billion annually between 2007-2011, up from $5 billion in 2000 and $10 billion in 2006.
Daukoru told journalists the award of the contract came after Nigerian National Petroleum Corp. gained access to the damage on the Chanori Creek pipeline. Previously militants had prevented NNPC officials from reaching the damage.
The pipeline supplies crude oil to two refineries, one at Kaduna in northern Nigeria and one at Warri in the Niger Delta. Both refineries have an installed capacity to refine 235,000 barrels of crude oil a day.
Pumping of crude to the refineries would wait until the repairs are completed, Daukoru said.
"It cannot be completed in less than three months," he added.
Closure of the Kaduna and Warri refineries left Nigeria with its two refineries in Port Harcourt, but operations there have also been impaired by equipment breakdown. Consequently, Nigeria has depended on imports to meets domestic gasoline requirements, with daily national need put by the NNPC at 33 million liters a day.
Daukoru also said the crisis in the Niger Delta, caused largely by attacks by militants who want a greater share of oil resources, has had no adverse impact on investments in the energy industry.
Militants in the area have attacked oil and gas facilities, often leading to a halt in operations by multinational oil companies, whose workers have become targets of kidnap.
Daukoru dismissed speculation that the attacks may slow progress on the execution of the Brass LNG project, which is being promoted by a number of multinational oil companies in a joint venture with NNPC.
"How can the security of a long-term project be hinged on the crisis in the Delta, which will soon be over?" he asked in response to a question.
He said the crisis in the region would soon end because he had been talking to "the boys (referring to the armed militia groups) and there is no war situation in Nigeria."
On the planned bid round for the sale of Nigeria's oil acreage this year, Daukoru said his ministry was still working out the details. According to him, a committee working on the program met Wednesday to decide on issues including the number of blocks to be offered, reserve values, and the procedures for participation by companies.
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