Refiners Give Update on Construction of 7 New Refineries to Join Dangote
- There have been significant obstacles to investments in the building and full-scale operations of seven refineries across the country
- They warned that without seven new refineries, the objective of attracting investors and investments might remain unachievable
- The NUPRC released industry data showing that 15 operators hold licenses to develop refineries with a total daily refining capacity of 1,151,500 barrels
Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.
Investments in the construction and full-scale operations of seven new and existing refineries nationwide have been severely hampered by the ongoing lack of crude oil, local refiners.
Source: UGC
They cautioned that the lofty goal of luring investors and investments meant to increase local refining capacity and lessen reliance on imports may remain unattainable in the absence of a Seven new refineries in Nigeria and a consistent and dependable supply of oil.
Eche Idoko, the National Publicity Secretary of the Crude Oil Refinery-owners Association of Nigeria, revealed the most recent development.
The Nigerian Upstream Petroleum Regulatory Commission provided industry data showing that 15 operators have licenses to build refineries with a total daily refining capacity of 1,151,500 barrels.
However, just 852,000 bpd, or a small portion of this capacity, is presently in use, which raises questions regarding the nation's underutilization of refinery facilities.
Since this has remained a significant issue in the industry, owners of refineries with this capacity, however, have shortages in the delivery of crude oil to their systems.
Crude oil shortages
According to analysis, three facilities selected by the NUPRC to receive daily crude allocations are not active, and five of these refineries have been granted approval licenses but are not yet operational.
Additional research showed that the 2,500 bpd Duport refinery is not operating, and the 10,000 bpd OPAC refinery is now not operating because of inadequate feedstock. Additionally, the state-owned Kaduna refinery is not currently operating even though it has been approved to refine products.
Despite the widespread approval, the refineries' current operational capacity is still far below the licensed potential. The licenses were given to private investors in the mid-stream sector with the expectation that they would greatly increase Nigeria's refining capacity and lessen its reliance on imported refined petroleum products.
However, Idoko listed additional obstacles to these refineries' full operation, such as insufficient funding, postponed project schedules, and technical issues. Reliance on the nation's aging refineries, which are having difficulty keeping up with domestic fuel demand, has resulted from the situation.
Dangote suspends naira for crude
Due to concerns about the naira-for-crude deal and a discrepancy between the amount of crude allocated paid for in naira and its actual sales, the Dangote refinery recently announced a temporary suspension of its petroleum product sales to marketers in naira.
Idoko emphasized that this gap in operational capacity is not only caused by funding but also by technical challenges, of which crude guarantee is a major obstacle.
According to insiders familiar with the development, the Nigerian National Petroleum Company Limited had given large volumes of crude to its foreign creditors in order to settle the loans acquired by the firm, making it difficult to sustain the naira-for-crude deal between NNPCL and Dangote refinery.
Source: UGC
The national commander clarified that these facilities' inability to find a feedstock source prevents them from scaling past the point at which an investment decision is made.
Idoko said,
“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 for them to pass this stage, which is the final financial investment stage, they would have to guarantee and allay the fears of investors on some challenges.
“And one of the major fears that they have is the availability of crude. So crude availability is a major issue, and the news making the rounds about the unavailability of crude to refineries that are already operating is not making our case easier.
3 companies get approval to construct new refineries
Legit.ng reported the Federal Government of Nigeria, through the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), has issued a licence for the construction of new refineries to three Nigerian companies.
NMDPRA, in a statement shared on X, said the three refineries will contribute 140,000 barrels per day (bpd) to Nigeria’s domestic refining capacity.
The companies approved to build the refineries are Eghudu Refinery Limited, MB Refinery and Petrochemicals Company Limited and HIS Refining and Petrochemical Company Limited.
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Source: Legit.ng
