Iheanacho decries Nigeria’s weak investment in refineries
The Executive Chairman, Integrated Oil and Gas Limited,and a former federal cabinet member Emmanuel Iheanacho, has called on the federal government to enable more refineries to be built in the country
Iheanacho, a former Minister of Interior, made the call at the just concluded 2020 edition of Nigeria International Petroleum Summit (NIPS) in Abuja.
“We are not investing enough in refineries. Instead of waiting on OPEC to give us a quota of 2 million barrels per day (bpd), we can produce 4 mbpd and build refineries to refine and add value to our crude” he stated.
Iheanacho compared the Nigeria downstream market structure and that of the United States of America, a non-member of the Organization of Petroleum Exporting Countries (OPEC).
“The US is has a population of 327 million with a total of 139 refineries with the refining capacity of 16.7mbpd. Texas, a state in the US has a population of 28.7 million with 47 refineries and a refining capacity of 5.7 million barrels per day. Compare these numbers with Nigeria that has a population of 200 million people with 4 refineries with installed refining capacity of 520,000bpd but is only able to refine 5 per cent of installed capacity.”
He decried the plight of the country that has not been able to get things right despite having been in the oil and gas business for over 60 years. He further implored the government to take a second look at the market structure in terms of cost and efficiency.
“Open market competition creates efficiency in the system. In that vein, government must take a look at the subsidy regime and regulation. The subsidies do not really benefit the common people” he said.
In his presentation, titled ‘Sustaining Industry Momentum in the Downstream – What new strategies, tactics and innovative partnership’, Huub Stockman, Managing Director of OHV Energy stated that refining is a catalyst for the rest of the oil and gas industry.
Stockman noted that refining has the power of changing Nigeria from net importer to self-sufficiency adding that while increasing Nigeria’s refining capacity is of central importance, attention must be given to other drivers of the downstream sector such as better customer experience that comes from improved staff training, improved quality and safety of trucks as well as further investment in terminals and pipelines.
“If Nigeria wants to capture the full benefits of the downstream value chain after the enhanced refining capacity, the other downstream sectors need to use this short time window to make improvements in the customer experience, and safety and operational standards driven by technology.
This will only be possible through major investments which are not feasible at current margins,” Stockman said.
Sarki Auwalu, Director of Department of Petroleum Resources (DPR), acknowledged that refining is key to government’s goal of making energy affordable. “Government wants to create the enabling environment for investors to come into the downstream sector” he said.