By: Abdulwaheed Sofiullahi, in Abuja
The Crude Oil Refinery-owners Association of Nigeria (CORAN), has presented a solution to the incessant crude oil theft, which threatens to choke off investment in the country’s oilfield development.
The proposal involves the installation of one 10,000 Barrels Per Stream Day refinery per marginal oilfield, leading to 40 such refining plants on 40 marginal fields in the Niger Delt basin.
These 40 plants on forty fields will have a combined 400,000BPSD capacity to service different regions in the Niger Delta basin, CORAN has suggested.
About 20 members of the advocacy group, led by its chairman, Momoh Jimah Oyarekhua, were received at the office of the Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, in Abuja last week.
“This approach will enable the processing of a minimum of around 400,000 barrels of crude oil for refining, subsequently impacting petroleum prices and alleviating the current economic pressures faced by the country on foreign exchange”, Oyarekhua said.
There are currently five functional Modular Refineries operating in the country, with a total nameplate input capacity of 34,500BPSD.
But the actual input into these five plants is no more than 15,100BPSD and those numbers are very optimistic.
Out of the five, for example, only two have dedicated oilfields supplying volumes of crude in excess of 3,000Barrels of Oil Per Day. They are:
- Aradel Holdings’ Three Train 11,000BPSD Ogbele Refining Facility, which has utilized, sometimes, as high as 6,600BPD of crude from the Ogbele field in the last three months.
- Waltersmith Petroman’s 5,000BPD refining plant, which receives 3,000BPD supply from Waltersmith’s own Ibigwe field, as well as between 2,000BPD and 3,000BPD from Seplat’s Ohaji field in the vicinity.
- The OPAC refinery, which receives, on average, 1,500BPD from Pillar Oil’s Umuseti marginal field
- Edo Refinery (published: 6,000BPD capacity) and Duport Midstream Refinery (advertised: 2,500BPD), both in Edo State, collectively receive, at the most, only 500Barrels per day, by trucks from Millenium Oil & Gas/ Decklar Resources’ Oza field in Abia state of Nigeria.
What CORAN wants, is for government to help guarantee the supply of crude to modular refineries which lack “stand by”, crude oil supplies. CORAN is hoping that the government, through with the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) will engage the group “based on the regulation that has been passed for domestic crude obligation. That obligation compels crude oil producers to supply a share of their crude to local refineries”.
The NUPRC has once claimed in a media release that it had supported modular refineries with crude oil supplies through the Domestic Supply Obligation, but CORAN members vigorously deny this claim, in private, as they do not want to be seen as wrangling with the country’s most powerful petroleum regulatory agency, in public.
CORAN has also advocated for intervention fund for modular refining business the way government has intervened in the natural gas business. “The buzz everywhere now is about clean energy and government has created funds that people who want to build infrastructure for gas will be able to access; and recently we hear of auto gas and some of those few things that they are trying to do in the gas space”, Oyarekhua told Africa Oil+Gas Report. “It is impossible for you to think that gas is going to solve all the problems that people or the society will require for their energy. Fossil fuel will still be with us for a long period of time so once you’re creating some form of succour for gas to be produced, which of course will also take a period of time, you also have to support the existing energy producers like us who are in the refinery space that are providing refined products for the society, part of which is diesel, fuel oil and kerosene until such a time where the gas industry is ripe enough. I think gas and fossil fuel are going to be ranked side by side continuously for a very long period of time. But as of today, the focus is on PMS and we are saying that the kind of funds that people who are creating or building gas infrastructure could access, there should also be that kind of fund created for the refinery industry or refinery owners to access in that space. This is what we advocating for”.
At the meeting in Abuja with the Minister of State for Petroleum (Oil), Oyarekhua stressed: “Our foreign earnings today are being significantly affected by the importation of roughly 30 to 40 percent of refined products into the country. These are the issues we have come to discuss with the minister, seeking government intervention through reliable supply and guarantees for those in the modular refinery sector”.
