After multiple unsuccessful attempts to address ongoing problems, the Crude Oil Refinery Operators (CORAN) have officially confirmed that the Federal Government is failing to meet the crude oil volume required for the operation of modular refineries in the production of refined petroleum products,leadership reports.
Furthermore, it has come to light that all operational modular refineries in Nigeria are currently operating below their capacity and incurring daily losses. Modular refineries are simplified facilities that demand significantly lower capital investments compared to traditional full-scale refineries. The initial process, known as the Crude Distillation Unit, allows for the straightforward distillation of crude oil into low octane naphtha, diesel, kerosene, and residual fuel oil.
In Nigeria, modular refineries are crude oil processing plants with capacities of up to 30,000 barrels per day, established as part of efforts to combat oil theft and promote peace in the oil-producing Niger Delta region. Meanwhile, the nation’s full-scale refineries in Port Harcourt, Warri, and Kaduna, under the management of the Nigerian National Petroleum Company Limited (NNPCL), have remained inactive for an extended period, despite government assurances to revitalize them.
Oil marketers and other stakeholders in the mid and downstream oil sectors have consistently called on the Federal Government to provide essential support to modular refinery operators in a bid to reduce Nigeria’s heavy dependence on imported petroleum products.
One crucial form of support is for the government, through the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), to ensure the adequate supply of crude oil to enable modular refineries to produce refined petroleum products domestically. However, despite recent claims by the NUPRC that it was fulfilling the crude oil supply requirements of modular refineries, operators of these facilities have contested this assertion.
When asked if the NUPRC was meeting the crude oil supply requirements of modular refineries, as it had recently stated, Mrs. Dolapo Kotun, Deputy Chairman of the Crude Oil Refinery Owners Association of Nigeria, refuted this claim, stating that discussions had been ongoing for a while, but no template or framework for supply and delivery had been provided to operational members.
In a statement released last month, the NUPRC contended that it had supplied 3,614,936 barrels of crude to three local refineries between September 2021 and May 2023, asserting that only refineries complying with the relevant requirements of Section 109 of the Petroleum Industry Act, 2021 were eligible for crude supply. They noted that 1,726,049 barrels of oil were supplied to two refineries that met the requirements of the law between January 2019 and August 2021, before the PIA came into effect. The post-PIA supplies were made to Walter Smith, NDPR, and OPAC refineries, with Millennium Oil and Gas Limited recently approved to supply crude to OPAC and Duport refineries in Edo State.
However, the CORAN official, Mrs. Dolapo Kotun, refuted these claims, stating that even guaranteed volumes of crude had not been provided to operational modular refineries. She emphasized that all operational modular refineries were refining below capacity and incurring daily losses, relying on feedstock from marginal fields or purchases from local companies with marginal fields.
CORAN firmly maintains that the NUPRC is not providing the full truth, placing the responsibility on the government and its agency, the NUPRC, to take necessary actions to rescue the industry.