All articles in the Refining Gap Section:

Probe the failure of Government’s Greenfield Crude Oil Refineries in Nigeria

NNPC’s recently announced proposal to construct two 100,000 Barrels of Oil Per Day (BOPD) greenfield refineries has encouraged a leading Civil Society group to request the Nigerian Government to conduct a root cause analysis on the abandonment of similar refineries earlier announced for three other states in the last five years.

The state hydrocarbon company’s new proposal calls for a refinery each in two states in the Niger Delta Basin:  Delta and Imo States. Yet the same company had carried out feasibility studies for similar plants in Kogi, Bayelsa, and Lagos states, which were fully paid for and completed.

BudgIT, a civic technology organization at the forefront of raising the standards of transparency, citizen engagement and accountability, declares that “it is wrong for any government institution to tease citizens with announcements for greenfield crude oil refineries, award huge sums for feasibility studies, abandon the project when it’s time for construction, then repeat the cycle in another state”.

“What guarantees do citizens have that taxpayers’ money earmarked for the refineries in Imo and Delta state will not suffer the same fate as those spent on Kogi and Bayelsa States? What are the lessons learnt from Kogi, Bayelsa, and Lagos greenfield projects?

Can these lessons be made public?”

NNPC exports a large portion of the 445,000BOPD of crude oil allocated to domestic refineries through Crude Oil Lifting contracts (COL) largely due to (1.)  NNPC’s inability to make existing refineries work – despite monies spent on turn around maintenance, and (2.) the failure of NNPC’s new, greenfield refineries to see light of the day – despite monies spent on them.

In the past, NNPC has been accused of carrying out its export of unused Domestic Crude Allocation (DCA) through politically-connected middlemen – many of whom do not have adequate capacity to handle the volume of crude oil in their Crude Oil Lifting contracts but simply extract rent and pass the contract on to those who do. Ibe Kachikwu, Nigeria’s Minister of State for Petroleum Resources, had previously promised to cut out the rent-seeking middle men in the award of Crude Oil Lifting contracts and also to cut down the number of contractors to sixteen (16) when he was the GMD for NNPC..

BudgIT recalls that the government made some effort to cut out middlemen in the award of Crude Oil Lifting (COL) contracts in the early days of President Muhammadu Buhari’s tenure, in 2015. “We observed a drop in the number of COL contractors from about 43 in 2014 to 27 in 2015[1] and then to 21 in 2016. However, their numbers grew to 39 in 2017[2] and to 50 in 2018. Citizens need to pay close attention especially as a part of the Diezani scandal was rooted in the activities of some briefcase companies who got Crude Oil Lifting (COL) contracts.”

BudgIT then asks Nigerian citizens, civil society organisations, journalists, and media influencers to #AskQuestions about Nigeria’s greenfield refineries every step of the way. BudgIT also calls on NNPC to do a weekly or monthly briefing to citizens specifically on progress and challenges of its greenfield projects as failure of greenfield refineries to see the light of day opens up many complex loopholes for corruption in the long term.

“BudgIT will not fail to commend NNPC for publishing its monthly Financial and Operations Report online since the inception of this administration. Such monthly reporting is worthy of emulation by other government agencies in the sector. However, we’d like to call on NNPC’s management to reduce the time lag involved in making these reports available. As at October 30th, its report for the last four months (June – September) are not yet available online.

“BudgIT calls on all political parties not to weaponize data concerning the oil and gas industry in the run up to May 2019 elections, but use data as a tool for dialogue to seek long lasting reforms. Many problems in the oil and gas sector are complex in nature and have defied solutions across multiple governments. To be blind to this reality is to walk unprotected into a clouded minefield set up by vested interests that have defied multiple administrations. Let’s focus on the real issues. #StayWoke and #AskQuestions”.


Niyi Soleye

Communication Lead, BudgIT

BudgIT is a civic organization that applies technology to intersect citizen engagement with institutional improvement, to facilitate societal change. A pioneer in the field of social advocacy melded with technology, BudgIT uses an array of tech tools to simplify the budget and matters of public spending for citizens, with the primary aim of raising the standard of transparency and accountability in government.

If the NNPC Had Implemented the Refinery Revamp The Way I Planned

By Ibe Kachikwu

Nigeria’s Minister of State for Petroleum Resources

I wasn’t sure I could make this event, I had three different events for the day, one in Russia, another in Equatorial Guinea and one here. Eventually I had to call my colleague in Russia to say it’s so important that I should be here because of the significance of this event and so I won’t be able to make it to Russia. Then I negotiated hard with Razak (Abdulrazaq Isa, Chief Executive Waltersmith), to say how do I get here and still make it to Equatorial Guinea where I need to function as the president of African Petroleum Producers Association. The effect of that is I’m going to make this speech very quick and catch the next flight to Malabo so that I can return back to Nigeria before the end of day.

The king of the place Eze Ekweme Ekweme is really the major owner of the protocols here and once I recognise him, I can then stand beside other existing protocols. I’m particularly glad to see here today, the likes of the Shell MD and Nigerian Content Development Monitoring Board (NCDMB) Executive Secretary. I’ll tell you why I’m particularly glad for their presence. My good friend Osten Olorunshola and of course the Eze himself.

For Shell, it is simply an attention to the fact that the time has come to process without just carrying crude out, and ultimately the policies of this country will begin to compel that if we can’t persuade that. Because some of the things I’ve struggled with as I’ve pushed very aggressively, the whole concept of refinery, re-injection and re-activation and the modular refinery is how do you find the crude? The crude is owned by those who produce it and so once they take theirs away, we’re left with nothing to process. But in the next couple of months, those will begin to change. We’ll have to begin to enforce the 20% crude processing requirement in this country, graduating all the way to 50% over the next 5 years. Really we have no option otherwise we’re going to just stay in an abyss of not processing while people are taking away raw materials. The time for that is gone. I’m hoping Okunbor’s presence here not just as Shell MD but also head of (the Oil Producers Group) OPTS is to begin to have that dialogue that is essential. Because I find out I can achieve more when I can dialogue rather than when I can compel. I only compel when I can’t dialogue and I’d like to see that move very rapidly.

For NCDMB, I’m happy that they’re here largely because as Chairman of NCDMB, when we put together this whole process of putting money in Bank of Industry, most of that was articulated by Simbi and I’m not sure we actually knew where the 200Million dollars was going to go, we just knew that we had a momentum to help the local industry. But since then, he and his team have done a fantastic work in articulating where these monies should go and how it should be deployed. I’m currently in the middle of trying to settle a battle between him and the Bank of Industry (BOI) because in his typical manner, he said he has given 6 months and he hasn’t seen where the money where it should be so I need to take my money. We’ll be having a meeting over the next few days in trying to resolve that. But that’s the spirit, there’s a reason why things are done. I’m happy that he’s here and more than Razak, he’s put a lot of pressure on me to make sure that whatever I’m doing, I should be present here today. Osten Olorunshola, largely to the fact that he’s done a huge amount on the Petroleum Industry Bill PIB and I tell him not to be disillusioned.

The president’s position is not that PIB will never see the light of day, that’s not his position. His position is that there are concerns that he has and we need to make him comfortable, he’s the man who’s going to sign. Nobody should sign what he’s not comfortable with. I urge him to put on that garb of perseverance that he has and continue to work with us and let’s see how we can get the big man to the point of comfort because this is something that needs to happen for the country. NNPC, your huge presence today is incredible! It’s very nice for me, because you’re part-owners of most of the crude. If I’m going to drive this policy, I need to get you on my side. So hearing the lovely words that the COO GAS has said just gives us a lot of happiness. Accompanying him is the COO SERVICES who’s also here. I’m very glad that you’re all here today. Let me spend a few minutes on what the refining roadmap is for this country. First is that we’re very much committed to repairing what we call the existing Big Four which are the four refineries we have located in Port-Harcourt, Kaduna and Warri.

If everybody had ran at the speed that I wanted to run, we should have that up and running quite frankly all done and functioning by 2019. Not for election purposes, but for the fact that it will be such a sad day for this country if at the end of 2019, we’re still hopping around the world trying to import product. It costs us a lot of money, it’s a waste of vital foreign exchange that we shouldn’t pay and it deprives our people of god jobs at hand. We need to hurry up that process. The board is working with NNPC to see how fast we can, I’m not sure any of us realized what is required for raising international finance for these things when we started, so it’s taking a bit more time since when we started but believe me, they get polished each time we have a board meeting  because we need to move on this goal and I’m continuous with the move around the world to find Alternative Financing because I did give the president my word that federal government money will not go into this project if we can help and we’re looking for private sector funding.

So that’s the first step in the roadmap, and if we do that, we’ll be able to process at least 500,000 barrels from these four refineries. The second is of course the Modular Challenge. As part of the strategy to pull away militants from crude processing of products, we came up with the concept of absorbing a lot of them, create modular refineries in these contiguous communities, create jobs and get some of the fairly uncouth skill sets that they have and polish them and put them in the system and that is how the whole concept of modular refineries started. Thank God the Vice-President bought into that and worked very hard with us as part of the 14-Point Agenda for reducing militancy in the Niger-Delta. So today we hope that if the 10 Modular Refineries that have at least began to kick-off, have signed basic agreements, some of them have actually commissioned and are working and the very first one to put products in the markets will do so by December/January and if we do that, out of those ten modular refineries, we hope to process between 200,000-300,000 barrels of crude oil into the system.

That of course includes WalterSmith.  The third arm of that is obviously the private sector-led Greenfield refineries. Under that, you have the Dangote bumper 650,000 barrel refinery which he’s doing in Lagos, we have the Niger-Nigeria one which is about 70,000-100,000 barrels, we have the Agip one which is about 150,000 barrels refinery in Bayelsa and we have the one led by a Chinese consortium which we’re finalising now which will also be able to do a c-location refinery. Infact, we have two co-location refineries possibilities. One far gone, one just beginning, each of them about 100,000 barrels.  So again, from this field alone, you have processing in excess of a million barrels of crude in this country. So you can see that these are well thought out policies driven from the mind of specific focus on refining and if we do that, we’ll be able to process between a million and a million and half barrels of crude oil in this country and take over what is basically the processing hub of West Africa and East Africa.

The market is there just for the picking so it would be a shame if we let some of these opportunities go. Realizing that very early in the game therefore, I set up a refining technical team and brought in the COO/SCA Suleiman who’s done more work on this. I get the praises, but he’s the man in the engine room. He’s driven very purposefully the whole dream of how we can get to the refining final hub, both the modular, both the refinery activation. NNPC is doing, both the third-party private-sector driven ones. And his singular purpose is to be able to deliver this as quickly as possible, so this is how we’ve gone about this.

But how do we get crude to those that want to refine, because some of those who want to refine do not have production wells. Some of them are going to depend on third-party injections and that’s one of the things we’re struggling with Dangote right now, how do we get him all the gas and crude he needs. But I believe that the private sector led by the majors are equally committed to the progress and success of this country and as long as the crude itself is adequately priced in a way that it doesn’t injure their interests, they should be able to get adequate amount of crude back in. I’d also be pushing NNPC through NPDC to uplift their game.

Another thing is what incentives must you provide for this group of people who want to refine Nigerian crude? We’ve succeeded in providing Custom duties clearances and waivers as a first call to enable them bring in their equipment at zero duty levels. We’ve created a financing model which NCDMB is driving. Funding is key, what I’m expecting NCDMB to do ultimately is to work with Suleiman as the engine to drive refining not just local refining. What it means is that we’re going to have to find funds, federal government funds, CBN-designated funds to put in the hands of NCDMB in a managed professional way to help those who need to reactivate and build refineries in this country. So that there’s funding available for you to manage, there’s funding for you to expand the scope of what you’re doing currently, which is a bit limited to be able to take much bigger proposals and more committed individuals. And I think that when you do that, the IOCs will be able to come onboard once they can see a funding line, a credible partner, they can see a direction and then we’ll be able to go.

The other incentive or other directive you’ll be able to see coming out, hopefully soon is what I call the “Clutch-free Mechanism”. That Clutch-free means that those who have licences who can’t use the licences will have to let them go. We’re not going to have people just clutching on licences and putting them as signboards in their houses. If you take a license, we’ll give you a timeframe in which you must put up or shut up! There’re people who have held Modular licences for 2,3,5 almost 10 years and have done nothing with it other than just hawking it all over the place. If you can’t use it, there’s no need for me to licence almost 40 Modular licence and you’re talking of only 10 being active, So that Clutch-free Mechanism is something we’re going to begin to explore very seriously with DPR to try and free up the whole of some of these licences.

Being excerpts from the Keynote Address By the Honourable Minister of State For Petroleum, at the Groundbreaking Ceremony of Waltersmith Refinery & Petrochemical Company Limited, Ibigwe, Ohaji Local Government Area, Imo State. The speech was delivered extempore. Transcription was by Foluso Ogunsan.


Ibigwe Refinery Construction Awarded to V-LEM

A partnership between Waltersmith Petroman and the Nigerian Content Development Monitoring
Board (NCDMB), has awarded a turnkey EPC contract for the construction of a 5,000BOPD capacity
crude oil to a consortium named V-LEM.

The contract is worth $48.5Million.

The refinery, to be located on the Ibigwe field in the eastern Niger Delta, will process crude oil into
diesel, naptha, kerosene and Fuel Oil.

The equity part of the financing comes from Waltersmith, a Nigerian E&P company which operates
the 6,000BOPD Ibigwe field, and NCDMB, the Nigerian state parastatal overseeing progress and
delivery of local content milestones in the industry, which is investing in the project.

The debt financing comes from Africa Finance Corporation (AFC), a development finance institution.
V-LEM consists of two companies: VFuels and Lambert.

VFuels will construct the Inside Battery Limits (ISBL), which is the refining process chambers of the
facility, while Lambert will construct the Outside Battery Limits (OSBL), the civil works of the
refinery. The construction is expected to take 18 months.

GE Linked Company Leads SPV Winners For Uganda’s Refinery

Nuovo Pignone International SRL, a General Electric Company located in Italy and the EPC Contractor SAIPEM SPA, also Italian, are the most recognisable of all the partners in the Special Purpose Vehicle who won the bid to build, operate and partly own the much anticipated 60,000BOPD refinery in Uganda.. 

The Albertine Graben Refinery Consortium (AGRC), as it is known, includes YAATRA Africa (Mauritius) and Lionworks Group Limited (Mauritius) as well as the Uganda National Oil Company (UNOC), which is a limited liability petroleum company owned by the government.

The SPV will now build the oil refinery in Hoima District after the signing of the Project Framework Agreement between the government and the AGRC.

The composition of the nationalities in the consortium was not lost on Yoweri Museveni, the Ugandan President who, like his peers, have recently been keen on doing business with China. He said the composition of the AGRC showed that Western companies were also waking up to realize Africa’s potential. He challenged Western companies to take interest in “helping” Africa explore its resources potential, saying the continent presented immense business opportunities. “Africa and the West share a lot of history together and there is a need for them to use these past linkages to further economic business,” said the President.

The signing of the PFA means pre-Final Investment Decision (FID) activities like Front End Engineering and Design (FEED), Project Capital and Investment Costs Estimation (PCE), Environmental and Social Impact Assessments (ESIA) can commence.
Under this agreement, AGRC will be responsible for funding the pre-FID activities listed above and will also proceed to construct and operate the refinery. The consortium has also been tasked to ensure Ugandans get jobs and skills out of the project.

The refinery, which will be developed as a commercial undertaking with focus on the regional market, will supply products like kerosene, petrol, diesel, heavy fuel oils, among others.

The entire project will be implemented by a Special Purpose Company, the Refinery Company, that will be incorporated by the private investors and the Uganda Refinery Holding Company, which is a subsidiary of the Uganda National Oil Company.
AGRC commenced negotiations in 2017, in 2017 following the fall out of Russia’s RT Global Resources, with the Government of Uganda, after talks collapsed with the ministry, around RT’s request to scale down the size of the refinery while SK Engineering the alternate bidder showed disinterest with the project thereafter.

Sahara Raked the Highest Losses in Crude Oil Processing

By Sully Manope, in Abuja

Of all the four, loss making Offshore Processing Arrangements (OPAs) for Nigerian crude, the deal between NNPC and the Sahara Group incurred the most debit in 2015, NEITI has reported.

The country as a whole lost over $723 Million in the year to those arrangements, forged between the Petroleum Product Marketing Company (PPMC), a downstream subsidiary of the state hydrocarbon company NNPC, and each of four companies, namely: SAHARA, AITEO, Duke Oil and NAPOIL, the 2015 audit report of the Nigerian Extractive Industry Transparency Initiative (NEITI), has disclosed.

The report, released in Abuja in the closing weeks of 2017, indicated that the arrangement with SAHARA Petroleum incurred a loss of $323,129,180.50; the AITEO arrangement recorded a loss of $221,095,575.24; the DUKE OIL arrangement recorded a loss of $160,658,295.07 ($, whereas the NAPOIL arrangement recorded a loss of $44,553,458.59 ($44.5Million), making a total loss of $723,285,929.70. The exception to these losses was the arrangement with CALSON, where PPMC made a profit of $26,150,579.70.

OPA is one of several options used by NNPC to import supplies of petroleum products in exchange for Nigerian crude. The Nigerian populace consumed 18.2Million Tonnes Per Annum (MMTPA) of petroleum products in 2014, of which 71% or 12.9MMTPA was gasoline. But the country’s government owned refineries cannot refine the requisite volume of crude to deliver these volumes, so NNPC resorts to these crude oil for petroleum product deals to satisfy the market.

Yet huge losses like this make the country’s vocal, intellectual minority dismiss those deals as nothing but ways of siphoning public funds.
OPA had been used before, then discontinued. Just prior to its reincarnation in 2015, the option used by NNPC was Crude-Product exchange also known as SWAP. It was discontinued in 2015 while OPA was re- initiated, to process white fuels PMS, AGO, and DPK at cost and sent back to Nigeria. The offshore refineries retain and pay for other products such as VGO, LPFO, Fuel Oil, Propane, and Butane at the current market price to NNPC.

NEITI’s 2015 audit report disclosed that Grand total losses from 2010 to 2015 for OPA and SWAP have been $2,549,328,360 ($2.54Billion). “NNPC benefited from NIGERMED arrangement in 2010, however discontinued the contract in 2011”, the report says, adding that the country’s loss because of the combined OPA and SWAP arrangements peaked in 2011 at $928,868,083 ($928.8Million). The highest loss in terms of the OPA arrangement in any year, however, was the $723,285,930 ($723.3Million) loss in 2015.

French Consortium Tasked to Revamp Cameroon’s Sole Refinery

By McJohn Ntonto, in Douala

A consortium of French contractors have won the contract to modernise and extend the effluent treatment plant at the refinery of the National Refining Company (SO.NA.RA) in Limbé, Cameroon.

SUEZ,SOGEASATOM and INGENICA, wona$25.84Million of which SUEZ has a share of about $7Million. It is SUEZ’ first venture in treating effluents from the refining industry in sub-Saharan Africa.

For SOGEASATOM, which is handling general revamp of the refinery, West Africa is a familiar business place.

SUEZ has made a lot of noise about its $7Million effluent treatment contract, which is a significant part of the revamp. “It will make significant improvements to the quality of the treated effluents before they are discharged into the natural environment, thus helping to limit the SO.NA.RA refinery’s environmental impact”, the Paris based company says in a widley distributed press release. “Ensuring these effluents are treated optimally is a key issue for Limbé, one of Cameroon’s beach resorts, in order to protect the coastline and enhance the region’s attractiveness”.

SO.NA.RA’s site – the only refinery in Cameroon – is 82% owned by the government, and produces almost 2Million tonnes of refined hydrocarbons per year. “SUEZ will equip the plant with POSEIDON™ technology, a solution which has an excellent reputation for pre-treating effluent using flotation in the refinery”, the company claims.

Dangote Refinery Contracts DuPont Technology for Clean Emission

DuPont Clean Technologies announced that Dangote Oil Refinery Company Limited has commissioned a range of advanced proprietary equipment from DuPont for the construction of a new refinery in Lekki, an emerging seaport and manufacturing hub, located in the east of Lagos, Nigeria’s top commercial city.

Construction of the new refinery is part of a strategy to boost the country’s refining capacity. Dangote plans to turn 650,000Barrels of crude oil per day into 59 Million litres of gasoline; 20Million litres of Kerosine and 29Million litres of diesel per day, at peak performance.

“The innovative DuPont technology will allow Dangote to maximize quality and profitability while minimizing its environmental impact”, DuPont Clean Technologies says in a statement. “DuPont will be supplying Dangote with proprietary equipment for STRATCO® alkylation unit, MECS® sulfuric acid regeneration (SAR) unit, MECS® DynaWave® sulfur recovery unit (SRU) tail gas scrubbing, and BELCO® EDV® fluid catalytic cracking unit (FCCU) stack scrubbing that will help Dangote meet gasoline pool octane and emissions requirements”. The MECS® DynaWave® and BELCO® EDV® scrubbing technologies are leading refinery scrubbing technologies, also licensed and designed by DuPont. They offer ultimate emission control reliability and continuous operation.

At 650,000BOPD input, the Dangote refinery, on course for commissioning in 2020, is set to become the largest single-train refinery in the world. Within the same complex in Lekki, a petrochemical plant delivering 1Million Tonnes of polypropylene, a fertiliser plant with capacity for 3Million Tonnes of Urea Per Annum and a 3Billion cubic feet per day gas project pumped through 1,100km of subsea pipelines from the country’s south east to Lagos, are collocated.

“We are delighted to be supporting Dangote on a project that is of such critical importance to creating economic growth and opportunity in Nigeria,” said Eli Ben-Shoshan, global business leader, DuPont Clean Technologies. “Our aim is always to enable our customers to meet their emissions targets easily and efficiently with the help of cost-effective technologies and services that offer them value and flexibility while minimizing the impact on the environment.”

The new 27,000 Barrels Per Stream Day (BPSD or1,060 KMTA) alkylation unit and the 260 Metric Tonnes Per Day (MTPD) SAR unit will allow the facility to produce high octane, low sulfur, low RVP alkylate with zero olefins. Designed to meet world standards for particulate matter and SOx emissions, the DynaWave® wet gas scrubber will ensure full-time compliance with emissions regulations on both 115 ton per day SRUs, and the BELCO® EDV® wet gas scrubber will reduce the stack emissions from the FCCU as well as provide a purge treatment to condition the scrubber effluent. Both of the SRUs and the FCCU are supplied by other licensors.

Despite producing 2.12MM BOPD crude oil in 2015, Nigeria traditionally imports 80% of domestically consumed refined product, as national refining capacity is low, at 0.002BPD per capita.

“Licensed and designed by DuPont, the STRATCO® alkylation technology is the established global leader in the industry with over 90 units licensed worldwide and more than 850,000 BPSD (33,300 KMTA) of installed capacity. For over 80 years, the STRATCO® technology has helped refineries safely to produce cleaner-burning fuel with high octane, low RVP, low sulfur and zero olefins”, DuPont explains in its statement.

Why Nigeria Should Have Open Bidding for the Refineries

A Response to Mr. Kachikwu’s “No Open Bidding for Nigerian Refineries
Dear Mr. Kachikwu,

I read the statement from Daily Trust of 26th May 2017 from Vienna Austria where you were attending the 172nd OPEC meeting currently in Session. Quoting your contradictory utterances, further confirms and reinforces my humble conviction that you should use your good offices to open up these refineries for International Competitive Bidding (ICB). This will be in tandem with the philosophy of President Muhammadu Buhari and best global practices.

May I also remind you that your utterances do not reflect and comply with the simple ethical rules of Public Governance in a democratic setting.
Crude oil refinery concession or ‘farm out’ or privatization is not as highly technical as you are claiming in your statements.
We’ve been through the process before and I wish to refer you to BPE/NCP 2007 refinery privatization closure. First Boston Credit Sussie (now Credit Sussie), which isone of the top investment banks on the globe, was the privatization adviser to the Federal Government of Nigeria on the four refineries. PNB Paribas also gave advisory support to the Bureau of Private Enterprises (BPE)for the final closure of the privatization of Port Harcourt and Kaduna refineries, 10 years ago.
We still have these Nigerian professionals and expertise both in BPE and around the country to handle this your new ambitious ‘highly technical’ refinery concession through an open and fair bidding competition.

You contradicted yourself by the statement that the bidding process is open to all willing investors, but how will all the willing investors with technical and financial capabilities know across the globe if you do not advertise what you want to sell or concession with all the criteria and ground rules for them to comply with. Do you think the whole world will be aware by watching you on TV talking about the refinery concessions in Nigeria as a ‘talk advertisement’ from Houston Texas to Lagos to Vienna, yet you are going to be the umpire for the bid evaluations and awards. How?

Your claim that the Federal Government had decided to concession all refineries by August 2017 is a welcome decision but you need to ensure that the process is through an open bid competition via the appropriate statutory Federal Government bodies NCP/ BPE/ICRC to enable Nigerians have a ‘bidders beauty parade’. This is the essence of the open bid process because itshould give us the most qualified investor that could possibly come up.

As proprietary as the case with GE/Nigeria Railway narrow gauges’ advantage was, the Federal Ministry of Transport went ahead to place an advert for other ‘would be’ investors to compete with GE. At least this will to a certain extent give credibility to GE proprietary know-how in railway engineering when they eventually get declared as the final winner. It appears from your utterances in the last one month that you are bent in giving out these refineries to the crude oil swap candidates without open bid, which you would have achieved on behalf of the Presidency to enhance the transparency obligation, with a minimum of three weeks advert in some local and international media. The invitation to bid would have closed by now. The choices are open bid or no open bid, this unnecessary debate could have been avoided because you cannot win.

Yes, “People keep mentioning Agip and OandoPlc but nobody has made the final decision on those” – This your statement being quoted in full further portrays your bias for Oando and Agip as you have become like a ‘sales agent’ to them, are Agip and Oando the only repairer and operators in the world. Part of your statement says “Agip and Oando are probably the front runners because they have put a lot of work on that but you are not in the technical committee”, what is the meaning of this in transparency? You are not a member of the technical committee as Mr. Minister of State for Petroleum and Chairman of the Board of NNPC but you are privileged to know that Agip and Oando have put a lot of work into this transaction. How does this help our transparency image?

My humble advice Mr. Kachikwu is for you to allow BPE/NCP or ICRC to handle this transaction in the most transparent manner. Oando for example bid along with others for Port Harcourt refinery in 2006/2007 and lost. Today any of these companies may win if they do their homework but it must be through an open transparent competitive bidding. Finally in your public declaration from Vienna you said you are the Chair of the steering committee waiting for the technical committee to finish their work before your steering committee will then take it to the NNPC Board – If this process is not yet concluded, why then have you started to talk about Oando or Agip taking Port Harcourt refineries and how then do your public utterances give confidence to other would be investors in any of the refineries??

In summary, this whole transaction appears to be a mockery of ourselves and our processes in Nigeria because we the ordinary citizens have no power to interrogate your actions and inactions. For you to use the statement ‘Hullabaloo about the transparency has no basis’, is to say the least, condescending.

For the second time I advise you to resign now because you are dramatizing but not working for the common good of the Petroleum Industry and the Nigerian Citizens.

Dan D. Kunle

Sonangol Confirms Suspension of Refinery Construction

Angolan state hydrocarbon company Sonangol, has declared, as suspended, construction work on its 200,000Barrels Per Day Refinery in Lobito, in the country’s southwest.

The company also suspended the Oil Storage Terminal undergoing construction at Barra do Danda, near Luanda.

The announcement on Sonangol’s  website, confirms what Africa Oil+Gas Report published in its Refining Gap issue, ( Volume 17, No 5), released in late July 2016.

It looks like, for some time at least, Africa’s largest crude oil exporter will continue to import most of the refined products  it consumes.

The Angolans have been quit taciturn about releasing information about the status of the refinery construction.  Until this announcement, the best you could get from  the latest Angolan update of the United States’ Energy Information Administration. (EIA), wasthe official line: “Construction on a new Sonaref refinery in Lobito started in December 2012”.

And everywhere else in the public domain, “the refinery will have an initial processing capacity of 120,000BOPD and is scheduled to come online latest 2018.”

What should interest you is thesub sentence, “although the start date has been pushed back before”.

Africa Oil+Gas Report  had noted in the cited edition  that “no construction is going on at the plant, located in Lobito in  Benguela Province, on the Atlantic Coast north of Catumbela Estuary close to the country’s southwest.The promise by project promoters, that construction of the refinery would begin in earnest in 2015, after the initial groundbreaking in 2012, never came to pass.Sonangol did hire Standard Chartered Bank UK In December 2013, provide financial consulting , but the required funding did not come.

The Sonaref refinery first came to global attention at the World Petroleum Congress in Johannesburg, South Africa in September 2005, when Songol announced it had a list of willing partners queueing up to finance the project. In March 2006, the president of Sonangol and the vice president of Sinopec signed a partnership agreement to develop the refinery of which Sonangol would hold 70% of the stakes and Sinopec 30%. The (then) $3.5Billion project was planned to have the capacity to process 200,000 BPSD. Sinopec, the sole funder of the project, expected the refinery to start operations in 2010.

The Chinese pulled out early in the transaction, almost before the ink was dry on their agreement with Sonangol. In 2007, Sinopec withdrew from the project, citing concerns about the inclement climate for refined products. Coincidentally,Sinopec withdrew from its stakes in Angolan offshore oil blocks 15, 17 and 18, almost immediately after the end to negotiations on Sonaref.

The refinery is expected to run on Angola’s crude oil, with refined products sold to domestic and international markets. EIA explains that preliminary estimates show that Angola consumed roughly 130,000 BOPD of petroleum products in 2015, more than double the volume consumed ten years earlier. In September 2014, the government raised retail fuel prices by 25% for gasoline and diesel, by 21.6% for liquefied petroleum gas, by 34.6% for kerosene, by 100% for heavy fuels, and by 18.8% for asphalt.

Dangote Refinery: Low Double Digit Return in Seven Years

Devakumar Edwin, Group Executive Director of Dangote Industries Limited, says he expects a “low double digit return” from investment in its 650,000BPSD crude oil refinery seven years after commissioning.

The company has spent over $500Million so far paying for land, earthworks and land reclamation, jetty construction, buying capital and earthmoving equipment and other logistics.

→   Read the rest of this entry

© 2020 Festac News Press Ltd..