The First International Conference on Petroleum Refining and
Petrochemicals has harped on the need for more efficient refineries and
petrochemical plants in the country.
Giving a keynote address at the conference which was put
together by the Petroleum Technology Development Fund (PTDF) and the Institute
of Petroleum Studies (IPS), UNIPORT in Port Harcourt last week, PTDF’s
executive secretary, Engr. Multapha Rabe Darma said the importance of
functional refineries and petrochemical plants to the socio-economic
transformation of the nation cannot be over-emphasised.
According to Engr. Darma, aside engaging qualified workforce
meaningfully, the two industries would serve as the fulcrum for the auto,
plastic, pharmaceutical, textile, real estate, ICT accessories among other
He added that the nation’s per capital income would have a triple
digit increase if these industries are made to function efficiently noting that
petroleum products and bye products which emanate from refineries and
petrochemical, majorly oil the wheels of development the world over.
Also, said that a
director in the Centre for Petroleum Refining and Petrochemicals IPS, and the
conference executive chairman Prof. Godwin Igwe, advocated the establishment of
modular refineries, which have the capability of producing 20 to 100 gallons of
refined products, in the 36 states of the federation if the country must move
from a net importer of refined products to a major net exporter.
“It is a shame for the Nigerian government to depend mostly
on imported fuel and still sell crude oil on daily basis. I feel ashamed seeing
Nigerians looking for fuel all over the country because of scarcity of
petroleum products,” he lamented.
He argued that with modular refineries, which are less
expensive, in place there would be enough petroleum products for domestic use
and export thus providing job for the teeming qualified Nigerians and end the
embarrassing situation of fuel importation in the country.
He noted that Nigeria has competitive advantage over other
countries because of the raw crude material it has.
He also advocated the need for energy bank in the country
that would support investors intending to venture into refining of crude oil
and other relative activities in the country.
The Group Executive
Director, Refining and Petrochemicals, Nigeiran National Petroleum Corporation
(NNPC)Engr. Tony Ogbuigwe, to meet the
challenge of the nation’s national daily consumption of petrol, kerosene and
automotive gas oil (AGO) and the West African Sub-region growing demand, the
country has to change the way it operated the refineries in the past.
“This offers the Nigerian downstream sector of the oil and
gas industry opportunity for innovation, investment in new refineries and hence
the need for transformation as envisaged in the Petroleum Industry Bill,” Engr.
Ogbuigwe pointed out.
Also stressing on the need for additional investment in
refineries in the country, the Executive Secretary of PPPRA, Mr. Reginald
Stanley, said the country needs efficient refining capacity to meet the
increasing domestic demand and for export.
Mr. Stanley explained that the current installed capacity of
the refineries can only produce 26 million litres of Petroleum Motor Spirit
(PMS), 17 million litres of Automotive Gas Oil (AGO) and 10 million litres of
Household kerosene (HHK) per day while the domestic demand for these products
are 40 million, 12 million and 10 million litres respectively.
He, therefore, argued that to close the huge gap in the
demand and supply of these products, there was need for additional investment
and noted “three additional Greenfield refineries (with a petrochemical plant)
with a total capacity of 300,000bpd for $23 billion have been proposed. Nigeria
is therefore, being positioned as the future hub of petroleum products supply
in the West African and Sub-Saharan region,” if implemented.
Nigeria Earns N2.7trn From Domestic Crude Oil Sales In 2019
The latest report by the Nigeria Extractive Industries Transparency Initiative (NEITI) has put Nigeria’s earning from domestic crude oil sales in 2019 at N2.7 trillion.
According to NEITI’s 2019 Oil and Gas Industry Audit report, the country earned N2.72 trillion from just domestic crude oil sales.
It added that of this figure, N518.07bn was deducted for Petroleum Motor Spirit, PMS, under-recovery by the Nigerian National Petroleum Corporation, NNPC.
This figure is N213.07bn above the approved sum of N305bn for under-recovery in 2019.
Similarly, the sum of N126.66bn was incurred by the corporation as costs for pipeline repairs and maintenances, which showed a difference of N96.38bn from the approved sum of N30.29bn for the purpose.
The report also pointed out that N31.84bn was deducted for crude and product losses due to theft and sabotage in 2019.
The sum of $34.22bn was recorded as revenue from the oil and gas sector in 2019.
The $34.22bn revenue represented an increase of 4.88 percent over the $32.63bn garnered from the sector in 2018.
A breakdown of the earnings showed that payments by companies accounted for $18.90bn, while flows from federation sales of crude oil and gas accounted for $15.32bn.
The report showed that 10-year (2010-2019) aggregate financial flows from the oil and gas sector to government amounted to $418.54bn, with the highest revenue flow of $68.44bn recorded in 2011, while the lowest revenue flow of $17.06bn was recorded in 2016.
According to NEITI, the total crude oil production in 2019 was 735.24 million barrels, representing an increase of 4.87 per cent over the 701.101 million barrels recorded in 2018.
Production Sharing Contracts contributed the highest volumes of 312.042 million barrels followed by Joint Venture and Sole Risk, which recorded 310,284 million barrels and 89.82 million barrels respectively.
Others include Marginal Fields and Service Contracts which accounted for 21,762 million barrels and 1,330 million barrels respectively.
The report also showed that total crude oil lifted in 2019 was 735.66 million barrels, indicating a 4.93 per cent increase to the 701.09 million barrels recorded in 2018, with companies lifting 469.01 million barrels, while 266.65 million barrels was lifted by the Nigeria National Petroleum Corporation on behalf of the federation.
Egbin Power Plant Plans 1,900MW Boost
A boost for electricity generation is on the horizon.
This indication comes on the heels of a planned additional 1,900 megawatt (MW) to the country’s power generation capacity by the Egbin Power Plant.
Its Chairman, Temitope Shonubi, made this known while unveiling expansion plans for the Egbin (Expansion) Phase 2 Investments, which is expected to add between 1,750MW and 1900MW to power generation.
Shonubi, conducting a delegation of the NNPC led by its Chief Operating Officer (COO), Gas and Power, NNPC, Yusuf Usman, an engineer, through the plant’s post-privatisation, said the plant has gone through major overhauling, which he said has helped to increase its generation from the low capacity it had before 2013.
“Egbin has 1,320 MW capacity. As at the time we took over, the plant was generating 300MW which is an abysmal 22 per cent. As at today, our generation capacity has surged and we do 89 per cent. We have reached 970 MW, the peak generation for the year and we are working hard to ensure sustainability of this feat. The 970MW we hit is the highest for the year and based on our core value of sustainability, we are working round the clock to make sure that we sustain the gains we have made,” Shonubi explained.
Listing challenges being faced by the company to include, grid limitation, gas constraints, and liquidity, Sonubi added that stakeholders, including the NNPC, Central Bank of Nigeria (CBN), and the Transmission Company of Nigeria (TCN) have been trying to solve the problems.
He called on the NNPC to keep exerting efforts towards gas development and supply of the product to keep turbines at Egbin working productively at optimal capacity.
Responding to the call and obviously satisfied with efforts put in so far in the thermal plant, Usman assured of the corporation’s commitment towards gas optimisation and supply for gas to power. He said NNPC will be joining the Egbin Power Plant to deepen gas supply for power generation.
He maintained that the NNPC was impressed with the turnaround at the thermal power station.
By: Tonye Nria-Dappa
Rising Oil Prices’ll Create Problems For Nigeria – NNPC
Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, has warned that rather than being a positive development, the rising prices of crude oil in the international market could cause major challenges for resource-dependent nations like Nigeria.
He spoke just as the International Monetary Fund (IMF) expressed concern over the re-emergence of fuel subsidy in Nigeria in the face of the country’s low revenue mobilisation.
The Washington-based institution, however, welcomed recent moves by the Central Bank of Nigeria (CBN) to unify exchange rates, certifying Nigerian banks as being liquid and well-capitalised.
Kyari, at the virtual Citizens Energy Congress, tagged: “Securing a Sustainable Future Energy System through Strategy, Collaboration and Innovation,” yesterday described the rising price of crude oil as a “chicken and egg” situation.
He added that oil prices had started exiting the comfort zone set by the NNPC, and becoming a burden.
The forum was organised by DMG Events, a London-based Public Relations company, which said the occasion was to provide an opportunity for players to reset the energy agenda post- COVID-19 and connect the divergent and polarising perspectives.
Kyari put the comfort zone globally at $58-$60, saying that for the NNPC, anything above $70-$80 will create major distortions in the projections of the corporation and add more problems to the company.
Brent crude, Nigeria’s oil benchmark, is currently selling for over $74 and is likely to increase further in the coming days as the NNPC continues to battle the dilemma of shouldering the payment of petrol subsidy, which has made it unable to contribute to the Federal Account Allocation Committee (FAAC) on two occasions.
Kyari expressed the concern that as the commodity prices rise, buyers of Nigeria’s crude may be compelled to accelerate their investment in renewable sources of energy, thereby leaving the industry in a quagmire.
He said: “In a resource-dependent nation like Nigeria when it gets too high, it creates a big problem because your consumers shut down their demand. Demand will go down and obviously even as the prices go up, you will have less volume to sell.
“So, it’s a chicken and egg story and that’s why in the industry when people make estimates for the future, they always make it about $50 to $60. Nobody puts it beyond $60.
“But for us as a country, as prices go up, the burden of providing cheap fuel also increases and that’s a challenge for us but on a net basis, you know, the high prices, as long as it doesn’t exceed $70 to $80, it’s okay for us.”
According to him, Nigeria will have no problems supporting the restoration of about 5.8 million barrels a day that the Organisation of Petroleum Exporting Countries (OPEC) still has offline since the pandemic, due to the curbs in production quota imposed by the oil cartel.
He said adding that number to demand will stabilise and probably bring oil prices down to about $60 level or a little below $60, stressing that that’s a comfort zone for every producing company or country.
“I don’t see them (Nigeria) having any difficulty agreeing to add additional volume to cushion the effect of these high prices for this period,” he said.
He stated that Nigeria is already producing well below its capacity, because in early 2020, the country actually produced up to 2.4 million barrels of oil per day for both oil and condensates.
With declining investments in the oil sector, Kyari stated that in a short time, most likely the next five years, the world may experience an energy crisis if the current situation is not properly managed.
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