After Dangote, Another Refinery Cries Out for Crude Oil Supply, NNPC Gives Explanation
- The Edo Refinery, with a 1,000 bpd capacity, is facing severe challenges due to a lack of crude oil supply
- The refinery, which AIPCC Energy Limited manages, said that bureaucratic delays have prevented the refinery from accessing crude since 2021
- Dangote Refinery is also facing similar challenges and has been forced to shift the date for petrol production
Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
The Edo Refinery and Petrochemicals Company Limited (ERPCL) has raised concerns over the shortage of crude oil supply, a challenge that has hindered its operations.
The management of AIPCC Energy Limited, operators of the refinery, said in a statement to journalists that it has struggled since 2021 to secure the necessary feedstock to run at total capacity.
Source: Getty Images
Edo refinery seeks crude to function
Speaking on behalf of the company, Segun Okeni expressed frustration at the persistent crude oil supply issues, stating that the refinery has been unable to meet its production targets due to the erratic and insufficient supply.
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His words:
On August 18, 2021, our team, led by our chairman, met with the NNPC GCEO and top management to discuss our intention to purchase crude oil from NNPC, and we promptly submitted a formal request for supply.
In July 2022, NNPC representatives visited our facility for a site inspection to verify the mechanical completion of the Edo refinery. By September 2022, we were invited for a commercial negotiation meeting with the NNPC to discuss terms, after which we sent a follow-up letter identifying potential oil fields for crude offtake.
"In March 2022, we also wrote to the Ministry of Petroleum Resources, informing them of our refinery's status, upcoming projects, and the challenges we face due to the lack of crude oil supply.
"Additionally, between November 2022 and March 2023, we engaged with NNPC Exploration and Production Limited (NEPL), highlighting our urgent need for crude oil supply from oil fields where NEPL holds equity stakes."
ThisDay reports that the company said that the crude oil supply issues have not been resolved despite the meetings, correspondences, and communications with NNPC over the past three years.
He added:
"ERPCL also has a Crude Oil Supply Agreement with ND Western to lift crude oil from the Ughelli Pumping Station (UPS), which is owned by NEPL and operated by Shoreline.
"Despite holding several meetings with Shoreline and Heritage Oil and expressing our readiness to make the necessary modifications to offtake crude oil from the UPS, no progress has been made to date."
NNPC explains crude supply
The Group CEO of NNPC Limited, Mallam Mele Kyari, stated that crude supply to refineries is determined by the "willing buyer – willing seller."
According to reports from Vanguard, the NNPC Limited chief emphasised that the company has complied with all the enabling laws governing its dealings with partners.
Kyari made these comments while testifying before the Senate Ad-Hoc Committee investigating alleged economic sabotage in the Nigerian petroleum industry.
His key words are:
"Refining business is a straightforward business. You must secure (a source for) your feedstock and you must find a market. This is basic and this determines what happens in any refinery anywhere in the world. That is the business of refining. We have done nothing to sabotage any domestic refinery”.
PH refinery is ready to commence production
Earlier, Legit.ng reported that the Independent Petroleum Marketers Association of Nigeria stated that the Port Harcourt refinery is expected to be completed for production in August.
The refinery will be able to produce 10–12 million litres of petroleum products for marketers to purchase.
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Source: Legit.ng
