Fresh details have emerged on why many of the Modular Refinery licensees are yet to flag off construction activities.
Investigations by Business Hilights Intelligence Unit (BHIU), an independent research arm of Business Hilights publications showed that the Federal Government had in the last four years given approval licence to well over 38 companies who applied to build modular refineries to ease product supplies and reduce imports.
However, checks have revealed that over 95 percent of the licensees are yet to begin construction activities.
Top officials of some licensees companies, who spoke to our correspondents in Lagos, Port Harcourt and Abuja, partly linked their delays to the trending closure of high capacity refineries in European countries due to serious drop in use of petroleum products for alternative energy sources.
Licensees argue that it will be more economical and seamless to buy a closed but functional refinery that has larger refining capacity than investing in modular refineries.
Though many of the European refineries had been working on closing down in the last few years, there are strong indications that the owners may wish to relocate them to economies where petroleum products are preferred to alternative energy sources like Nigeria and many sub-Saharan Africa.
Only recently, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr Maikanti Baru gave an insight of government’s plan to explore buy-over of closed European refineries to close the import gap currently terrorizing the economy in terms of rising landing costs and subsidy controversies.
According to him, Nigeria’ll benefit from refinery closures in Europe.
He revealed that the projected closures of some refineries in advanced economies imply that there will likely be a relocation of refining operations from those countries to areas of higher demand for petroleum products like Nigeria.
BHIU gathered that European fossil fuel consumption has been decreasing for the last five years, at least, ever since 2008, partly because of biofuels initiatives but more importantly because of poor economic activity. The European economy is also facing strong headwinds, and we might be seeing the third recession in six years.
Similarly, up until the emergence of cheap shale gas and new sources of LTO in the United States, refineries in the US were hurting as well and undergoing similar rates of shutdowns or conversion to fuel depots. This was for largely the same reason: high gasoline prices coupled with a poor economy made consumption levels shrink.
Statistics show that of the Europe’s 104 refineries, a lot will be shut permanently by 2020 from France to Italy to the Czech Republic, a Bloomberg survey of six European refinery executives showed.
Already, in EU, oil consumption is headed for a fifth year of declines to the lowest level since 1994, the International Energy Agency (IEA) estimates. Two-thirds of European refineries lost money in 2011, according to Essar Energy Plc, owner of the U.K.’s second-largest plant.
