Stakeholders in Nigeria’s oil and gas sector has said the much-awaited Dangote refinery will not be a challenge to other smaller modular refineries coming on board in 2019.
The $12billion Dangote Refinery an hour east of Lagos will begin to stream and is due to hit full capacity by mid-2020. It will be the world’s largest single-train 650,000 bpd refinery. Still, many stakeholders have raised concerns about the market fate of other smaller modular refineries who might struggle to sell their refined products.
Modular refineries are usually available in capacities ranging from 1,000 to 30,000 barrels per day (bpd). They provide flexibility and can be constructed in a phased manner, also the relatively low capital cost and flexibility for upgrades can make it a cost-effective supply option for investors, especially if diesel is planned to be the lightest yield.
Layi Fatona immediate past managing director of Niger Delta Exploration & Production Plc owners of Ogbele Refinery said the upcoming Dangote refinery does not pose a threat to modular refineries because of the huge market demand.
“Our products don’t come to Lagos. Roughly about 20 to 24 million litres of our products disappear into the local economy of southeastern states legitimately,” Fatona told BusinessDay.
Fatona noted that Ogbele Refinery is certainly not in any competition with Dangote Refinery because the market is too large for Dangote alone to operate in.
“So we are not under any threat or in any competition at all,” Fatona said.
Also, CEO of Crown Refinery and Petrochemical limited Kassim Adeleke said there are lots of uncovered vacuum in the petroleum downstream sector while also adding that upcoming refineries can fill lots of uncovered vacuum in the downstream sector.
“The market is deep enough! For us, it is more of contributing to an industry output that will meet the demand,” Adeleke said when asked how his company would compete successfully in this market, considering the number of like modular refineries springing up in the country.
Recall, Former Minister of State for Petroleum Resources, Ibe Kachikwu, said there are strong indications that three out of the 40 planned modular refineries would come on stream by end of 2019.
“Out of the 40 licenses issued, only 10 have shown progress by submitting their programmes and putting something on the ground.
“By end of 2019, we are assured that three private modular refineries would come on stream,’’ he said.
For decades, fuel scarcity and high cost of it have made Nigerian about the world’s worse country for economic gravity despite the massive availability of crude oil in the country.
Federal Government subsidy on fuel had increased to N2.4 billion daily since May last year from N774 million in March 2018, as a result of the high price of crude oil in the international market, according to a Petroleum Products Pricing Regulatory Agency (PPPRA) report.
For investors in the downstream oil sector, Nigeria is a large market with a high demand for petroleum products. For example, there is an estimated local consumption of petroleum products in Nigeria of about 55 million litres per day. Premium Motor Spirit (PMS) and diesel account for 35 million and 12 million litres respectively. Dual Purpose Kerosene (DPK) demand is put at about 8 million litres per day.
Stakeholders said with many modular refineries jumping into the fray, Nigeria will soon heed the call by International Monetary Fund (IMF) advice for removal of fuel subsidy which is popularly referred to as landing cost and cost of transportation.
Meanwhile the Nigerian National Petroleum Corporation, NNPC has stated that it would encourage more private individuals to invest in setting up crude oil refineries in the country to end the importation of petroleum products.
This was even as the Dangote Group disclosed that 53 per cent of its soon-to-be-completed 650,000 barrels per day capacity refinery would be dedicated to the production of premium motor spirit, also known as petrol.
Mele Kyari , group managing director of the corporation, also declared that the NNPC was not in contest for market share with the forthcoming Dangote Refinery but rather providing support to the promoters of the project to boost in-country refining capacity.
Kyari, who was speaking while receiving the President and Chief Executive Officer of the Dangote Group, Aliko Dangote. He explained that as the chief enabler of the Nigerian economy, the NNPC had a duty to rally industry players like Dangote Group to achieve the long held target of making Nigeria a net exporter of petroleum products.
He assured that the same level of support would be provided to other promoters of refineries, noting that the ultimate goal was to enhance in-country production to the point of self-sufficiency and ultimately for export.
Dangote said the company’s objectives were aligned with the Federal Government’s aspiration to ensure adequate in-country refining capacity, stating that upon completion the refinery would dedicate 53 per cent of its projected 650,000 barrels per day refining capacity to the production of petrol.
Meanwhile the Nigerian National Petroleum Corporation, (NNPC) has stated that it would encourage more private individuals to invest in setting up crude oil refineries in the country to end the importation of petroleum products.
This was even as the Dangote Group disclosed that 53 per cent of its soon-to-be-completed 650,000 barrels per day capacity refinery would be dedicated to the production of premium motor spirit, also known as petrol.
Mele Kyari , group managing director of the corporation, also declared that the NNPC was not in contest for market share with the forthcoming Dangote Refinery but rather providing support to the promoters of the project to boost in-country refining capacity.
Kyari, who was speaking while receiving the President and Chief Executive Officer of the Dangote Group, Aliko Dangote. He explained that as the chief enabler of the Nigerian economy, the NNPC had a duty to rally industry players like Dangote Group to achieve the long held target of making Nigeria a net exporter of petroleum products.
He assured that the same level of support would be provided to other promoters of refineries, noting that the ultimate goal was to enhance in-country production to the point of self-sufficiency and ultimately for export.
Dangote said the company’s objectives were aligned with the Federal Government’s aspiration to ensure adequate in-country refining capacity, stating that upon completion the refinery would dedicate 53 per cent of its projected 650,000 barrels per day refining capacity to the production of petrol.
OLUSOLA BELLO & DIPO OLADEHINDE
