The persistent unavailability of crude oil has significantly hindered investments in the establishment and full capacity operations of seven new and existing refineries across Nigeria, local refiners stated on Thursday. Industry experts warn that without a steady and reliable supply of crude, the ambitious objective to attract investors and boost local refining capacity may remain elusive.
According to industry data from the Nigerian Upstream Petroleum Regulatory Commission, 15 operators have licenses for the construction of refineries, with a combined refining capacity of 1,151,500 barrels per day. However, only a fraction of this capacity—852,000 bpd—is currently operational, raising concerns about the underutilization of refinery infrastructure in the country.
Analysis shows that five of these refineries have received approval licenses but are not yet operational, while three facilities designated by the NUPRC to receive daily crude allocations are currently inactive. The 10,000 bpd OPAC refinery is not operational due to poor feedstock, the 2,500 bpd Duport refinery is not working, and the state-owned Kaduna refinery, despite receiving approval to refine products, is currently non-operational.
Eche Idoko, National Publicity Secretary of the Crude Oil Refinery-owners Association of Nigeria, explained that many facilities are unable to scale past the final investment decision stage because they cannot secure a source of feedstock. “The major challenges that investors have had with completing the proposed plants in Nigeria is that a lot of these plants need to get past the Final Investment Decision stage… and one of the major fears that they have is the availability of crude,” Idoko stated.
The Dangote refinery recently announced a temporary suspension in the sale of its petroleum products to marketers in naira, due to concerns around the naira-for-crude deal and a mismatch in crude allocation paid for in naira and its actual sales. Insiders say the Nigerian National Petroleum Company Limited had allocated large volumes of crude to its foreign creditors to settle loans, making it difficult to sustain the naira-for-crude deal.
Chinedu Ukadike, National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria, further outlined challenges affecting the sector, including fluctuating government policies, poor internal and external security, inadequate funding, and community relationships. “One of the most important things to look at that causes this challenge is the policies of the government, internal and external security, funding, environmental control, community relationships, and the source of crude oil,” Ukadike explained.
The Petroleum Products Retail Outlets Owners Association of Nigeria President, Billy Gillis-Harry, suggested that the refineries are failing to function because the operators lack the requisite technical knowledge. Meanwhile, Olatide Jeremiah, CEO of petroleumprice.ng, called for an enabling environment that promotes investments, stating: “The fact that the NNPCL is trying to keep business terms with foreign buyers, denying our local refineries access to our sweet crude, is a misplaced priority, and I strongly charge NUPRC to work assiduously to increase crude production to 2.5 million barrels per day for stability in the petroleum industry.”
Source: punchng.com
