Following several failed attempts to resolve pending issues, crude oil refinery operators have confirmed that the volume of oil required for the production of refined petroleum products by modular refineries is not being met by the Federal Government. The media gathered that all functional modular refineries in Nigeria are refining below capacity and making losses daily. According to Dolapo Kotun, the deputy chairman of the Crude Oil Refinery Owners Association of Nigeria (CORAN), all modular refineries are refining below capacity and are experiencing losses daily.
He said that the reason is that the only feedstock which is currently available to them is what those that have marginal fields are producing, or what they can buy from indigenous companies around them that have marginal fields. Discussions have been ongoing for a while. But he revealed that no template or framework/process for supply and delivery has been given to their members who are in operations, having long since reached mechanical completion and final inspection.
NUPRC claimed it was supplying oil to lawful refiners.
In August, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) claimed that it was meeting the oil requirements of modular plants after some industry operators criticized the commission for not supplying crude to the plants. In a statement released to the public, the commission had stated that contrary to insinuations from some operators in the refinery business in Nigeria that the continued failure to supply local refiners with oil is capable of destroying members’ investment and stifling growth in the sector, the NUPRC said that it has delivered 3,614,936 barrels of crude to three local oil plants between September 2021 and May 2023.
According to the commission, only factories that complied with the relevant requirements of Section 109 of the Petroleum Industry Act 2021 were entitled to crude supply. Between January 2019 and August 2021, which is the period before the PIA came into effect, the NUPRC revealed that 1,726,049 barrels of oil were supplied to two refineries that met the requirements of the law at the time. Walter Smith and NDPR operate the two plants. The post-PIA supplies were reportedly made to Walter Smith, NDPR, and OPAC plants.
Commission had recently approved supply by truck.
Also, the commission said in a statement that it recently approved Millennium Oil and Gas Limited to supply 60,000 barrels of crude oil by truck at the rate of 20,000 barrels per month for three months to OPAC and Duport refineries in Edo State. But the CORAN official, who is the executive director of operations at Ikwe-Onna Refinery Ltd., as well as the chairperson of Downstream, Women in Energy, Oil and Gas, countered the NUPRC, saying that even some volumes of guaranteed crude had not been given to modular refineries.
She said, “The operational modular refineries are yet to receive a drop of the 60 percent feedstock guaranteed at ATC (Approval to Construct) license issuance “ Meanwhile, Heineken Lokpobiri, the Minister of State for Petroleum (Oil Resources), has said that the Port Harcourt Refinery (PHRC) will be ready by December 2023. This was contained in a release signed by Garba Deen Muhammad, the chief corporate communications officer at the Nigerian National Petroleum Company (NNPC) Limited on August 25, 2023.
Refining capacity in Nigeria is at one of its lowest.
During an inspection tour of the rehabilitation work progress at the PHRC Ltd. plant, the new minister said that the Federal Government is committed to ending petroleum product importation soon, as efforts are being redoubled to restore the nation’s local refining capacity. According to the latest annual statistical bulletin for 2023, OPEC said that Nigeria capacity to refine crude oil went from 33,000 barrels per day in 2018 to 6,000 barrels per day in 2022. Of course, the country’s non-functional refining plants have made Nigerians dependent on imported petroleum products for daily activities.