About 26 firms
have indicated interest to participate in the revamping of Nigeria’s four
refineries, which will require investment of about $2billion (N720billion)
according to
the Minister of States for Petroleum Resources, Dr. Ibe kachikwu.
This comes
as the U.S. Secretary of Energy, Rick Perry, has reiterated his country’s
willingness to continue to encourage investment in Nigeria’s oil and gas
sector.
The Nigerian
National Petroleum Corporation (NNPC), has four refineries, two in Port
Harcourt Refining Company Limited (PHRC 1&2), and one each in Kaduna
Refining & Petrochemical Company (KRPC), and Warri Refining and
Petrochemicals Company Limited (WRPC). The refineries have a combined installed
capacity of 445,000 barrels per day (bpd).
Despite the
abundance of feedstock in the country, the refineries still produce less than
their installed capacities, thereby subjecting Nigeria to decades of
importation of petroleum products.
Speaking
with reporters at the just-concluded Africa Oil Week in Cape Town, Kachikwu said
Nigeria is almost at the threshold of finalising the process, adding that
selection may be announced by January or February next year, in efforts by
Africa’s biggest economy to reduce its reliance on imports.
He also said
Nigeria aimed to lift oil output in January to 1.8 million bpd from the current
1.6 million to 1.7 million bpd, but would not breach the ceiling agreed with
the Organisation of the Petroleum Exporting Countries (OPEC). “If we get to 1.8
(million), then we need to say: ‘hey, close off the taps,’ because we need to
comply.”
He noted
that oil prices were now encouraging, although OPEC had not ruled out further
cuts to shore up the market.“The market is balancing fast. But do we need to
see more cuts? We’ll see,” he said.
Speaking on
self-sufficiency in crude oil refining, Kachikwu assured that the Dangote’s
650,000 bpd refinery is due to come on stream by the end of 2019. “That should
be enough to meet local needs.”
To boost
local capacity, the Director, Institute of Petroleum Studies, University of
Port Harcourt, Godwin Igwe, emphasized the need to install modular refineries
at strategic locations in Bayelsa, Rivers, Akwa Ibom, Cross River, Edo, Delta,
Ondo, and Lagos.
According to
him, modular refineries are flexible and cost- effective supply option for
crude producers in remote regions. He said: “This is particularly true where
there is a need to adapt rapidly to meet local demand. Relatively low capital
cost, speed and ease of construction are key advantages of a modular
mini-refinery. Location in close proximity and access to crude supply near to
sizeable markets will provide logistic advantage.
“To assist
in developing the country, we should contribute through the vital role of
technology in the systematic transformation of the production systems and
capacities.”
Meanwhile,
Perry, who commended Nigeria on the significant steps taken in the oil and gas
industry, added that the U.S. Government has a high level of respect for
Nigerians.
The landmark
meeting is the first of its kind between the two leaders of the energy sector
in both countries since the inauguration of the new U.S. administration. This
followed an earlier meeting that was hosted by the Office of the Secretary of
Energy in May, at the U.S. Departments of State and Energy in at the sidelines
of the Offshore Technology Conference (OTC), in Houston Texas.
Responding,
Kachikwu said the Federal Government of Nigeria under the leadership of
President Buhari has clearly set out the choices that have to be made as a
nation over the next four years. It has also taken significant steps in
achieving this through the continuous implementation of the 7BigWins – the
Nigerian Petroleum roadmap, which focuses on stabilising the business environment,
enshrining openness and transparency, and developing and entrenching new
policies and regulations.
These
laudable achievements, he noted, have contributed greatly in helping Nigeria
claw back from recession.The minister restated the positive role the Government
has played through the Joint Venture cashcall payment agreement, ensuring
adherence to due process in the sector, and promoting accountability. Others
are encouraging sanctity of contracts, and reviewing the fiscal policy to
provide incentives for investment in the sector, while optimising revenues for
the Government. He also hinted that plans are in place to reduce Government’s
role in the sector in order to increase private sector participation.
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