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Modular Refineries Panacea To Petrol Importation

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It is not in doubt that Nigeria is one country that is beautifully endowed with natural resources, especially hydrocarbon. She is rated the largest oil producer in Africa and the sixth in the Oil Producing and Exporting Countries (OPEC). She was the fifth largest supplier of crude to the United States of America (USA) until the shale gas discovery, an alternative source of energy, and the eleventh in the world.

Recently, at a three-day annual conference and exhibition of the Society of Petroleum Engineers (SPE) Nigeria in Lagos, the Petroleum Minister, Mrs Diezani Alison-Madueke, said critically the nation’s crude oil reserve was over 36 billion barrels and a current production capacity of about 2.5 billion per day which she acknowledged have made Nigeria the highest supplier of crude oil.

Alison-Madueke also expressed government’s determination to meet the oil reserve’s growth target of 40 billion barrels and an increase in production capacity to 4 million barrels per day by 2020. But the country still remains a net importer of petroleum products.

It is based on the premise that Nigeria being so richly endowed with crude oil but keeps importing refined petroleum products that stakeholders in many fora do not hesitate to condemn this action. Some describe it as a shame and scandalous.

Presenting a paper titled, “Sustainable Refinery Turnaround Maintenance” at the First International Conference on Petroleum Refining and Petrochemicals in Port Harcourt recently, Engr Tony Ogbuigwe, Group Executive Director Refining and Petrochemicals, Nigerian National Petroleum Corporation (NNPC) disclosed that within the past five years, the sub-optimal refinery capacity utilisation in the country averages about 20 per cent, while the bench-mark elsewhere was 60 to 80 per cent.

Mr Reginald C. Stanley, Executive Secretary, Petroleum Products Pricing Regulatory Agency (PPPRA) also delivering a paper at the same conference buttressed on the non-functional and low capacity utilisation of the nation’s refineries saying that the four local refineries with the capacity of 445,000 bpd capacity could only contribute about four to twenty per cent in the past five years to the national Petroleum Motor Spirit consumption.

Therefore, getting the four existing refineries to function efficiently is indeed a long term solution to meet the domestic demand for petroleum products in the country.

The President of Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Comrade Babatunde Ogun was quoted as saying that “If the TAM of the four refineries are done, which is supposed to be like 24 months give or take …. We would have been able to achieve about 80 per cent of what we expect if all of them are working maximally”.

However, some industry experts say with the four refineries functioning maximally they could still not adequately meet our local demand. Besides, there are other neighbouring countries that depend on us for these products. How do we meet this demand when the four refineries, at peak production, could barely meet domestic demand?

The need for a change of paradigm from a net importer of refined petroleum products to a major net exporter with our richly endowed raw material makes the call by Professor Godwin Igwe for the establishment of a modular refinery in each of the 36 states of the federation necessary. There is no nation, the world over, that can attain riches by exporting its raw materials without having a vibrant industrial base.

According to Prof. Igwe, to be a net exporter of refined petroleum products, the establishment of modular refineries in the 36 states of the federation is a must.

He said modular mini-refineries can provide flexible and cost effective supply option for crude oil producers in remote areas and very useful where there was a need to adapt rapidly to meet local demand.

He explained that with modular refineries which have relatively low capital cost, easy to construct and high speed, unit modules from 4,000 bpd up to 30,000 bpd primary distillation capacity could be produced. It could also be improved with debottlenecking to create a refinery of 100,000 bpd production capacity or more, he noted and added that they are usually prefabricated in workshop conditions and shipped to site for assembly.

Close proximity to crude supply, nearness to sizeable market and with logistic advantages which would decrease high distribution costs in remote regions, project finance on preferential terms from development credit agencies and some government incentives to regional development were some of the conditions required to make investment in modular refineries workable.

Explaining further on refinery investment, the professor in chemical engineering said, “the overall economics or viability of a refinery depends on the interaction of three key elements: the choice of crude oil used or crude state; the complexity of the refining equipment or refinery configuration; and the desire type and quality of products produced or product state.

Prof. Igwe, however, acknowledged that due to the importance of crude oil to the petroleum refining industry, the transportation cost associated with moving it from the oil field to the consuming regions and the crude qualities have made it more economical for distant refineries to use imported crude. But pointed out that similar factors have led some countries to the development of modular mini-refineries in crude producing regions since locating them close to the source of crude minimizes the logistics and distribution cost.

Instances of countries that have adopted the use of modular refineries include Papua New Guinea, Eromanga, Queensland Australia, Indonesia, Iran and Iraq.

In view of the foregoing, the effort of the federal government in signing a Memorandum of Understanding (MoU) with Petroleum Refining and Strategic Reserve (PRSR) Ltd and Vulcan Capital Corporation (VCC) Ltd for the establishment of six modular refineries in the country is very commendable.

The NNPC said in a letter that “the establishment of modular refineries is practicable and desirable to increase local refining capacity. The Corporation will be available to conduct detailed technical evaluation in conjunction with the investor group subsequently” and promised to make “utmost endeavour to ensure oil supply to the planned six modular refineries” but “subject to availability and location of refineries”.

This, indeed is a step in the right direction and should not only end at just six but more, may be the 36 suggested by Prof. Igwe if the nation must move from the present quagmire.

 

Vivian-Peace Nwinaene

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TotalEnergies, Conoil Sign Deal To Boost Oil Production

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TotalEnergies has signed agreements with Conoil Producing Limited under which to acquire from Conoil a 50 per cent interest in Oil Processing Licence (OPL) 257, a deep-water offshore oil block in Nigeria.
The deal entails Conoil also acquiring a 40 per cent participating interest held by TotalEnergies in Oil Minining Lease (OML) 136, both located offshore Nigeria.
Upon completion of this transaction, TotalEnergies’ interest in OPL257 would be increased from 40 per cent to 90 per cent, while Conoil will retain a 10% interest in this block.
Covering an area of around 370 square kilometres, OPL 257 is located 150 kilometers offshore from the coast of Nigeria. “This block is adjacent to PPL 261, where TotalEnergies (24%) and its partners discovered in 2005 the Egina South field, which extends into OPL257.
Senior Vice-President Africa, Exploration & Production at TotalEnergies, Mike Sangster, said “An appraisal well of Egina South is planned to be drilled in 2026 on OPL257 side, and the field is expected to be developed as a tie-back to the Egina FPSO, located approximately 30 km away.
“This transaction, built on our longstanding partnership with Conoil, will enable TotalEnergies to proceed with the appraisal of the Egina South discovery, an attractive tie-back opportunity for Egina FPSO.
“This fits perfectly with our strategy to leverage existing production facilities to profitably develop additional resources and to focus on our operated gas and offshore oil assets in Nigeria”.
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“COP30: FG, Brazil Partner On Carbon Emissions Reduction

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The Federal Government and Brazil have deepened collaboration on climate action, focusing on sustainable agriculture, renewable energy, and the reduction of black carbon emissions.
The partnership is anchored in South-South cooperation through the Brazil-Nigeria Strategic Dialogue Mechanism, which facilitates the exchange of ideas, technology, and policy alignment within the global climate framework, particularly the Paris Agreement.
The Executive Secretary, Amazon Interstates Consortium, Marcello Brito, made the disclosure during an interview with newsmen, in Abuja, on the sidelines of the 2025 COP30 United Nations Climate Change Conference, held in Belem, Brazil.
Brito emphasized that both nations are committed to global efforts aimed at curbing black carbon emissions, a critical component of climate mitigation strategies.
“Nigeria and Brazil are collaborating on climate change remedies primarily through the Green Imperative Project (GIP) for sustainable agriculture, and by working together on renewable energy transition and climate finance mobilisation,” Brito said.
“These efforts are part of a broader strategic partnership aimed at fostering sustainable development and inclusive growth between the two Global South nations,” Brito added.
TheTide gathered that President Bola Ahmed Tinubu announced an ambitious plan to mobilize up to $3 billion annually in climate finance, through its National Carbon Market Framework and Climate Change Fund, positioning itself as a leader in nature-positive investment across the Global South.
Represented by the Vice President, Senator Kashim Shettima, Tinubu made the announcement during a high-level thematic session of the conference titled ‘Climate and Nature: Forests and Oceans’
Tinubu stressed that Nigeria’s climate strategy is rooted in restoring balance between nature, development, and economic resilience.
Hosted in the heart of the Amazon, on November 10—21, the 30th COP30 conference brought together the international community to discuss key climate issues, focusing on implementing the Paris Agreement, reviewing nationally determined contributions (NDCs), and advancing goals for energy transition, climate finance, forest conservation, and adaptation.
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DisCo Debts, Major Barrier To New Grid Projects In Nigeria ……. Stakeholders 

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Energy industry leaders and lenders have raised concerns that the high-risk legacy debts of Distribution Companies (DisCos) and unclear regulatory frameworks are significant barriers to the financing and development of new grid-connected power projects in Nigeria.
The consensus among financiers and power sector executives is that addressing legacy DisCo debt, improving contractual transparency, and streamlining regulatory frameworks are critical to unlocking private investment in Nigeria’s power infrastructure.
Speaking in the context of new grid-connected power plants, during panel sessions at the just concluded Lagos Chamber of Commerce and Industry (LCCI) Power Conference, Senior Vice President at Stanbic IBTC Infrastructure Fund, Jumoke Ayo-Famisa, explained the cautious approach lenders take when evaluating embedded or grid-scale power projects.
Ayo-Famisa who emphasized the critical importance of clarity around off-takers and contract structures said “If someone approaches us today with an embedded power project, the first question is always: Who is the off-taker? Who are you signing the contract with?” . “In Lagos State, for example, there is Eko Electricity and Excel Distribution Company Limited. Knowing this is important,” she said.
She highlighted the nuances in contract types, whether the developer is responsible just for generation or for the full chain, including distribution and collection.
“Collection is very important because you would be wondering, ‘is the cash going to be commingled with whatever is happening at the major DISCO level, is it ring-fenced, what is the cash flow waterfall,” she stated.
Ayo-Famisa pointed out that the major stumbling block remains the “high leverage in the books of the legacy DisCos.” Incoming project financiers want to be confident that their cash flows won’t be exposed to the financial risks of these indebted entities. This makes clarity on contractual relationships and cash flow mechanisms a top priority.
Noting that tariff clarity also remains a challenge, Ayo-Famisa said “Some states have come out to clearly say that there is no subsidy; some are saying they are exploring solutions for the lower income segments. So, the clarity would be on who is responsible for the tariff, is this sponsored?, Can they change tariffs?, In terms of if their cost rises, they can pass it on, or they have to wait for the regulator.
“Unlike, what you find in the willing seller-willing buyer, where they negotiate and agree on their prices. Now they are going into grid, there is Band A, Band B, if my power goes into, say, Ikeja Electric, or I have a contract with them, “am I commingled with whatever is happening across their multiple bands?”
Also speaking, Group Managing Director and CEO of West Power & Gas Limited, Wola Joseph Condotti, stressed the dual-edged nature of decentralization in the power sector.
“Of course, decentralization brings us closer to the people as the jurisdiction is now clear. You also know that your tariff would be reflective of the type of people living in that environment. You cannot take the Lagos tariff to Zamfara, and this is what has been happening before now in the power sector. So, decentralization brings about a more customized solution to issues you find on the ground.
“Some of the issues I see are those that bother on capacity. It was a centrally run system that had 11 DISCOs. Of the 11 DISCOs, I think there are 3 or 4 of us today that are surviving or alive, if I may put it that way. If you go to electricity generation companies, they are doing much better,” she said.
Condotti highlighted regulatory overlaps as another complication, especially when power generation or distribution crosses state lines.
She said, “Investors would definitely have a problem. Say if you have a plant in Ogun State supplying power to another state, say Lagos State; you are automatically regulated by NERC. But the truth is that the state regulator of Ogun State and Lagos State wants you to comply with certain regulatory standards.”
With the growing demand for reliable electricity and an urgent need for infrastructure expansion, the ability to navigate these complex financial and regulatory landscapes would determine the pace at which new grid-connected power projects can be developed.
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