The Nigerian National Petroleum Corporation Nigeria (NNPC) is pushing ahead with its goal to revive its oil refineries and become a net exporter of petroleum products by the end of next year, delegates at the annual conference of the African Refiners & Distributors Association (ARA), in Cape Town, have heard.
“The federal government of Nigeria has laid the foundation and is focused on the country expanding its energy exports to include refined petroleum products post 2019,” said NNPC refineries and petrochemicals COO Anibor Kragha in a speech read on behalf of the NNPC’s group MD Maikanti Baru.
The State-owned NNPC, which was formed in 1977 to manage all hydrocarbon-related interests in Nigeria, currently operates four refineries and two petrochemical plants in the country.
“The NNPC’s Refineries and Critical Infrastructure Rehabilitation projects, along with various private sector partnerships to enhance in-country refining capacity, will undoubtedly enable the country to become a net exporter of petroleum products,” said the address by Baru.
The NNPC says Nigeria’s installed capacity can only process 20% of the oil that the country produces. It concedes that Nigeria has not kept up with the demand for refined products.
“Nigeria hasn’t invested in business and done maintenance when we should. We are trying to break and overcome a negative cycle. We want to rehabilitate the existing refineries to operate reliably at a minimum of 90% installed capacity,” said Kragha on behalf of Baru.
The NNPC is collaborating with the private sector to expand Nigeria’s in-country refining capacity via its brownfield refineries in three locations in the country, two of which are on the coast.
“We are on track to begin refurbishment work in the second quarter of this year, with refineries [to start] operating by the end of next year.”
The NNPC has outlined Nigeria’s pipeline and distribution network, which it says is robust. Its pipelines and associated infrastructure are also being rehabilitated and developed.
While the NNPC is upbeat and very keen to attract investors, Vitol SA head of Africa Pierre Barbe, was more cautious during question time at the yearly ARA conference.
He said Vitol had some knowledge about investing in refineries, as it was the unsuccessful bidder for the Chevron refinery in South Africa, and that investing in refineries was a major commitment.
“Refinery investment is a substantial one, with a number of risks, especially the domestic price formation and the capacity to recover margins.
“There may also be conflict of interest on the part of traders who have been lifting crude and supplying back to Nigeria for many decades,” he added.
The session’s moderator, David Sineke, questioned why there was so little investment in refineries in Africa.
“Apart from the Dangote project in Nigeria, I only know of three refineries built in Africa in the past 18 years, yet 681 refineries have been built worldwide. What is the stumbling block if investors can invest in countries like Indonesia and Vietnam? In Africa, only China has ventured into this space.”
Delegates at the conference particularly saw the value of Nigeria developing its refineries to keep up with its growing population and increasing energy needs.
The NNPC says it is at the forefront of providing services to address the energy challenges and make Nigeria self-sufficient.
As part of its energy plan, The NNPC sees tremendous potential for renewable energy.
“We have 33-million hectares of arable land available in Nigeria, yet only 10% is in use. There is enormous opportunity to nurture and grow renewable energyfeedstock.”
Biomass has been identified as a key source of energy, with seven site-specific studies having being carried out for sugarcane, cassava and palm oil. source: miningweekly