• As U.S. pledges commitment to investing in nation’s oil sector
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.