• Sunday, July 14, 2024
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The gains in domestic refining (1)


 Nigeria will in the near future begin to enjoy enormous economic benefits that will follow the successful completion and efficient operations of the proposed three Greenfield refineries and a modern petrochemical plant. If responsibly and prudently managed, the proposed project will help to eliminate the country’s recurrent problems of acute fuel scarcity and reliance on imported petroleum products. In addition to being self-sufficient, the nation will also be a net exporter of petroleum products. This will position our National Oil Company (NNPC) to engage profitably in the international trading of refined petroleum products. With such development, the downstream oil sector will be contributing appreciably with visible impact on the transformational policy of export-oriented industrialisation (EOI).

Originally, this project – the three Greenfield refineries and a gas refining/petrochemical plant – based on the gas pipeline network envisaged under the Gas Master Plan, was scheduled to come on stream by 2017. The project was conceived under a $28.5 billion provisional deal, with date of commencement of construction fixed for May 2013 by the China State Construction Engineering Corporation (CSCEC) for NNPC. Now the date of commencement of the project has been extended by one year, for obvious reasons. This change in date and perceived delay could be interpreted as a major setback to the nation’s plan to increase her refining capacity to above one million barrels per day (1,000,000 bpd) initially slated for 2017; more so when the originally proposed combined installed capacity of 750,000 bpd (Lagos 300,000, Bayelsa 300,000, and Kogi 150,000) has been whittled down/downsized to 400,000 bpd (Lagos 200,000, and Bayelsa and Kogi 100,000 each) based on the new Detailed Feasibility Study (DFS) prepared by Wood Makenzie & Foster Will. This is a not too good tiding.

At this point, and with this type of breaking news, I’m bothered mostly by the consequences of this development on our economic growth, with consideration of a futuristic infrastructure development because I perceive inefficiency once again creeping in on the side of the NNPC, with respect to their not being able to meet their own part of the deal on time. As a businessman, I know too well that “time is money” (take it or leave it). There should not have been any reason whatsoever on our part for procrastination or this unnecessary delay. How are we then making provisions to be net exporter of refined petroleum products, among other things? How do we then reconcile this development in view of our Vision 20-2020 (to be among the top 20 economies of the world by 2020)? This is worrisome indeed because I know that the 750,000 bpd (with specific reference to the Greenfield project alone) could yield, for instance, about 49,000,000 litres of PMS daily; and that when we first satisfy our daily domestic needs of about 40,000,000 litres, the net balance of about 9,000,000 litres could be thrown into and traded at the international market for extra gains because we have the ‘comparative advantage’ with the crude oil (the raw material) at our disposal.

By the above computation alone, the so-called estimated annual fuel subsidy we wasted in 2008, for example, which stood at around N650 billion, could equally become an added benefit to the nation’s coffers. This is just part of the benefits therein, in addition to the several lives and families that would have been positively affected or touched through generation and provision of labour. It might be as straightforward as I make it, but I know too well that I am only thinking visionary.

However, if by 2018 the three Greenfield refineries with the four existing ones happen to operate at a combined installed capacity, the country will then be boasting of 845,000 bpd domestic refining. This will be when the 400,000 bpd by the Greenfields is added to the existing “theoretically” combined installed capacity of 445,000 bpd. These existing refineries are the two arms of the Port Harcourt Refining Company (PHRC) with installed capacities of 60,000 bpd and 150,000 bpd. Both of them were built in 1965 and 1988, respectively. The second refinery, located at Alesa Eleme, was commissioned in 1989. Others are the Kaduna Refining and Petrochemical Company Ltd (KRPC) with installed capacity of 110,000 bpd and the Warri Refining and Petrochemical Company Ltd (WRPC) with installed capacity of 125,000 bpd.

Going by a record of estimated local daily needs of petroleum products, using PMS (40,000,000 litres) and AGO (12,000,000 litres) as example, a combined domestic refining has presently met our daily consumptions of the above by only 25 percent and 67 percent, respectively. This is according to data from their current production performances: 10,230,000 litres per day for PMS; 8,016,000 litres per day for AGO; and 5,530,000 litres for Dual Purpose Kerosene (DPK). This performance by the three refineries is based on improvement made so far (through repairs and routine Turn Around Maintenance) on their respective installed capacity utilisation thus: for the PHRC, it now runs at 66 percent; the KRPC runs at 65 percent; and the WRPC runs at 63 percent (according to the information released by the Group executive director, Refining and Petrochemicals, NNPC, Anthony Ogbuigwe, who further said: “All of our refineries are doing very well.”. Well, I reserve my comment for now.


Nwachukwu writes from Onitsha, Anambra State.

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