FG failing to meet refineries’ crude oil demands – Operators

Bisola David
Bisola David
FG failing to meet refineries' crude oil demands - Operators

The Federal Government is not supplying the amount of crude oil needed for the modular refineries to produce refined petroleum products, according to the facilities’ operators.

According to The Punch, it was also discovered that all of Nigeria’s operational modular refineries are currently operating below capacity and incurring daily losses.

Modular refineries are more efficient and require a lot less capital than conventional full-scale refineries.

The initial procedure, or Crude Distillation Unit, enables straightforward distillation of crude oil into residual fuel oil, low-octane naphtha, diesel, and kerosene.

Modular refineries, which can handle up to 30,000 barrels of crude oil per day, are being constructed in Nigeria as part of plans to curb oil theft and promote peace in the oil-producing region of Niger Delta.

Despite repeated promises by the government to fix the facilities, Nigeria’s full-scale refineries at Port Harcourt, Warri, and Kaduna all of which are managed by the Nigerian National Petroleum Company Limited, have all been idle for a very long time.

In an effort to reduce Nigeria’s significant reliance on imported petroleum products, oil marketers and other participants in the mid-and downstream oil sectors have frequently urged the Federal Government to provide the necessary support to operators of modular refineries.

In order for modular refineries to produce refined petroleum products domestically, the government must release sufficient volumes of crude oil through the Nigerian Upstream Petroleum Regulatory Commission.

“Contrary to insinuations from some operators in the refinery business in Nigeria that the continued failure to supply local refineries with crude oil is capable of destroying members’ investment and stifling growth in the sector,” the NUPRC said in a statement. 

The NUPRC said it has delivered 3,614,936 barrels of crude to three local refineries between September 2021 and May 2023.

It stated that refineries could only receive crude if they met the pertinent standards of Section 109 of the Petroleum Industry Act of 2021.

“During the time before the PIA went into effect, between January 2019 and August 2021, 1,726,049 barrels of oil were supplied to two refineries that complied with the law at the time.

The two refineries are run by NDPR and Walter Smith. Refineries at Walter Smith, NDPR, and OPAC received supplies following the PIA.

According to the NUPRC, the commission recently gave Millennium Oil and Gas Limited permission to truck 60,000 barrels of crude oil at a rate of 20,000 barrels per month for three months to the OPAC and Duport refineries in Edo State.

The CORAN representative, who also serves as the Executive Director of Operations at Ikwe-Onna Refinery Ltd. and the Chairperson of Women in Energy, Oil and Gas’s Downstream Committee, disagreed with the NUPRC and informed our correspondent that even some volumes of guaranteed crude had not been sent to modular refineries.

“The functioning modular refineries have not yet received a drop of the 60 per cent feedstock guaranteed at ATC license issuance,” she said. She also added that all modular refineries are refining below capacity and making losses on a daily basis.

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