Framework compelling oil majors to build refineries in Nigeria underway—Minister
Worried by observed poor investments of International Oil Companies (IOCs) in local refining sub-sector over the years, the Federal Government has revealed that fresh legal framework is being developed to compel them to invest in refining products than only production and sales.
Minister of State for Petroleum, Dr. Ibe Kachukwu disclosed the new development in his presentation at the ongoing Nigeria International Petroleum Summit (NIPS) titled, ‘Deepening Collaboration in the African Oil and Gas Industry–Challenges and Opportunities for Investment’.
While regretting that Nigeria’s low refining system meant it is almost wholly reliant on imports for the 40 million litres per day of gasoline it consumes, the minister revealed that list of approved new refinery licencees will be made public very soon.
He said part of the drive to compel IOCs to build refineries will among other thing include barring them from shipping out all the crude oil they produce in Nigeria.
The emerging frameworks for the multinational oil and gas firms to build refineries in Nigeria will lead to the processing of substantial amount of crude produced from their oil fields locally.
Kachukwu said “We would get to a point where Nigeria, definitely, would be a major supplier of refined petroleum products. It just has to happen. Nothing else makes sense. We are also saying directly to oil companies that a time would also come when we would not be open to see them move around all the crude oil they produce in Nigeria”.
“We will like to see integrated refining and integrated processing here. It gives us more jobs and creates more investments,” Kachikwu said.
Besides, just as the Minister averred that Nigeria had an average in-country refining capacity of 14 per cent and that this would be upgraded to between 90-95 per cent in 10 months to meet rising demands, there were some levels of murmuring in some parts of the hall meaning that it may not be possible hence there is nothing to show for that as at now.
Kachukwu made it clearer that the Federal Government will not sell the nation’s refineries but aim to make Nigeria the refinery corridor for the rest of the continent, stressing that the short and medium term priorities directed towards growing the country’s oil and gas industry.
According to him, a dearth in oil and gas infrastructure had affected the sector’s refining capacity which birthed an infrastructural map by government to address all the defects in crude pipeline and their leakages, depots and all related aspects.
He reaffirmed that rather than selling off Nigeria’s ailing refineries, the Federal Government will ramp up investments such that new refineries will be built across the country.
“The President (Muhammadu Buhari) has made it clear that he was not going to sell the refineries because if we sell them, we are going to be selling them as scraps,” he said.
“So the model we came up with is to bring in private sector investment in the repair and management of the refineries and get them up to about 90% of capacity.”
“That process is almost completed now, probably in a matter of weeks, we will be announcing the winners.”
“We want to get the private sector to be major investors in building new refineries.
“There are two or three modular refineries that are ready to come up.
“Agip is working towards final investment decision (FID) on 100,000 barrel per day (bpd) refinery in Bayelsa state, and of course there is the Niger Republic Refinery that we are discussing- also a 100,000 bpd potential.
“The objective is to make Nigeria a refinery corridor in Africa.”
