Low operational capacities of refineries worry operators
Operators in the oil and gas sector are worried that despite the noticeable improvement in Nigeria oil and gas sector, the below par operation of all the existing refineries remain a cause for concern.
According to the observers with the relative peace in the Niger Delta and less pipeline vandalism the refineries are suppose to start picking up.
They observe that all the refineries are producing at an epileptic average of less than 15 percent of its installed capacity stressing that with the current infrastructural imbalance Nigeria have in refining capability, the nation cannot achieve it huge potential.
Energy experts said that with four below par functioning refineries built in 70s and early 80s to service over 180m Nigerians compared with Saudi Arabia with a population of 26m that has 16 functional refineries, this present a worrying time for Nigeria.
Operators have at different fora urged the Federal Government to concentrate on local refining of petroleum products as the country has the potential to become West Africa’s refining hub by 2030 with a potential to export 94 million litres of petroleum products daily with the right conditions.
Report indicates that Nigeria has a proven crude oil reserve of over 37 billion barrels with condensate which could make her West Africa’s refining hub.
Locally too Nigeria consumes huge volumes of refined products. “With oil prices expected to remain low in the medium to long term, the focus on ramping up domestic refining capacity should become imperative. Lower oil prices would mean cheaper crude feedstock and higher refining margins for refiners. A shift from crude production to crude value realisation will see Nigeria becoming a net exporter of refined products by start of the next decade,”
Ken Abazie, Chairman of the Petroleum Downstream Group of the Lagos Chamber of Commerce and Industry said Government as a matter of urgency must declare emergency on the refining of petroleum products in Nigeria.
“It is a big shame that after over five decades of the commencement of drilling of crude oil in Nigeria, we don’t have a functional refinery. Government should go out of its way to get investors to invest in refinery in the country. Nigeria should be able to refine all its 45 million litres daily requirement and even export”.
He disclosed that Nigeria requires in the neighbourhood of 40-45 million liters of refined petroleum products daily but the country are scarcely supplying up to half of the requirement currently.
Dolapo Oni, Head, Energy Research, Ecobank Development Company (EDC) Nigeria Ltd observe that the present administration have passed some policies that will ensure a shift of the economy away from a strong focus on just oil to focus on gas, the fuel of the future.
Oni disclosed that Nigeria have played a key role in getting the global body to make key decisions that have influenced oil prices as seen by the decision of a country like Uganda looking to join OPEC because it recognise the important role it plays.
He however is worried that not much has been done in the area of boosting local refining.
According to him, “There are issues we are yet to resolve. Our refineries are still operating below par. Downstream we’re yet to fully deregulate the market”.
Operators observe that a complete deregulation of the downstream sector would encourage the construction of new refineries; liberalisation of fuel import and open access to oil and gas facilities such as pipelines, depots, jetties.
KELECHI EWUZIE