Policy direction on illegal refineries yet to crystalize

The recent destruction of 13 illegal refineries by Nigeria’s military in the restive Niger Delta oil hub, in an operation in which two soldiers died in clashes, shows that government is yet to crystalize its policy direction on the illegal refineries.

Major Abubakar Abdullahi, a military spokesman, said troops “discovered and destroyed 13 illegal refineries” while on patrol in the Iyalama Adama axis of Rivers state. The two soldiers were killed in the Ijawkiri general area, in Rivers state, he said.

But the Vice President’s office had said after Osinbajo’s diplomatic shuttle of the Niger Delta that government aims to legalize illicit oil refineries in the turbulent region hoping that the move would bring peace to the production heartland for the crude on which the country relies. If the refineries are legalized, according to the Vice President’s office, it could help soothe tensions in the Delta states, where an uneasy peace is now being kept as the government holds talks with local communities.

The government was said to have held talks with militants to end attacks on oil pipelines which cut the country’s output by 700,000 barrels a day for several months last year.

“Under the plan that is being developed, communities would come together working with their respective state governments, the federal government and private sector operators to work out a template for the establishment of modular refineries in the communities,” said the statement from the vice-presidency.

The legalized refineries must be structured “in a way that works for business or structure it in a way that is realistic and works, otherwise it would not last. It is a business proposition first and foremost, it must make sense,” said Vice-President Yemi Osinbajo, according to the statement.

The illegal refineries, which support tens of thousands of people locally, are makeshift, blackened structures of pipes and metal tanks hidden in oil-soaked clearings, processing stolen crude from oil company pipelines. Their legalisation was one of the main demands of community leaders in talks with the government.

“We are saying there is a way out of violent agitation, but it is by creating opportunities and the environment where the people in the communities can benefit,” Osinbajo said, according to the statement.

Illegal refining is one of the few businesses flourishing which has damaged the environment in an otherwise desolate region, as petrol is scarce in Nigeria due to the country’s dilapidated refineries in Warri, Port Harcourt and Kaduna.

The government in a bid to prevent theft from oil pipelines, last year shifted its attention to shutting down the illicit refineries. But the security clampdown ended up driving hundreds of young men into the militant groups which have been destroying oil installation crippling government’s revenue and its ability to finance its budget. Nigeria government depends on oil revenue for around two-thirds of its revenue.

The state oil company, Nigerian National Petroleum Corporation (NNPC), defended the government’s plan to transform the illegal refineries into legal entities for proper integration of the youth in the region. In a statement from its Group General Manager, Public Affairs, Ndu Ughamadu, the corporation’s Group Managing Director, Maikanti Baru, disclosed its support for the plan when he spoke at the 53rd International Conference and Exhibition of the Nigerian Mining and Geosciences Society (NMGS).

But the Department of Petroleum Resources (DPR), the industry regulator, is not in a hurry for the integration of the illegal refineries.

Wole Akinyosoye, Assistant Director, Planning and Budget, who represented its Director, Mordecai Ladan, during a technical session on opportunities and challenges in the Nigerian oil and gas industry at the just concluded Nigeria Oil and Gas Opportunities Fair (NOGOF) in Uyo, Akwa Ibom, said that the DPR would require a comprehensive Environmental Impact Assessment (EIA) from operators of the illegal refineries, after which it would undertake deep studies of them before deciding on operational licenses for them.

Military authorities say there are hundreds of illegal refineries in the region, which process stolen crude from oil company pipelines. Nigeria’s navy chief said that 181 illegal refineries were destroyed last year, 748 suspects were arrested, and crude oil and diesel worth N420 billion ($1.3 billion) was confiscated. The military shut down around 50 bush refineries in the first few weeks of 2017.

The Nigerian government’s bid to legalize illicit refineries as part of its attempt to bring peace to the production heartland of crude oil may have suffered a setback with the latest attack. It is, therefore, unclear when it will put the plan and policy of streamlining illegal refineries into action.

FRANK UZUEGBUNAM