• ‘It’s better to tackle challenges against local production’

• Doubts over Port Harcourt facility coming on stream next month

• Expert faults govt holding controlling shares in oil firms

The Nigerian National Petroleum Company Limited (NNPCL) may begin importation of 110, 000 barrels of crude oil per day from Venezuela or Saudi Arabia to operate the Kaduna Refinery due to come on stream next year.

Also, the Dangote, Bua and other refineries may be forced to import about 1.322 million barrels of crude oil per day amid oil production challenges in Nigeria, existing contracts on crude oil swap as well as other commercial issues.

Currently, the Dangote Refinery, with 650, 000 barrels per day refining capacity, is relying on imported crude, while the Bua Refinery within the South South region would need about 200,000 barrels per day of crude oil from next year. NNPCL is also looking to bring back its 445,000 barrels per day refineries between next month and next year, while the existing modular refineries will require 27,000 barrels per day.

Nigeria has been struggling to sustain its crude oil production. The country currently records 113.52 million barrels shortfall in meeting Organisation of Petroleum Exporting Countries (OPEC) output quota. That loss alone is about $8.9 billion in the first seven months of 2023.

While OPEC’s production quota allocated to Nigeria stands at about 1.742 million barrels per day, figures from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) showed that output has been averaging about 1.1 million barrels.

The NNPCL is with current obligations to supply crude to contractors, but the recent borrowing of $3 billion from Afreximbank would drastically reduce the volume of crude the national oil company could provide to the local market.

The Nigerian Upstream Regulatory Commission is currently dragging oil producers in an attempt to enforce Section 109 of the Petroleum Industry Act (PIA), which introduced Domestic Crude Supply Obligation (DCSO) to Nigeria’s oil industry to ensure domestic refineries are not starved of crude oil supply.

Although the regulator is threatening a fine of $10,000, a penalty of 50 per cent of their fiscal price per barrel of crude oil not delivered to refineries and denial of export permits, many of the crude oil producers are worried over commercial issues that may come up in such a transaction.

They are concerned about the logistics side of supply and safety of their data with NUPRC.

They added that refiners would need to convince them that the off-takers have dollars to pay for crude oil sustainably. Besides, most of the producers are divesting owing to crude oil theft, insecurity in the Niger Delta region and other problems bedevilling the oil and gas sector.

Renowned energy expert, Dan Kunle, said crude oil importation would not be ruled out next year for NNPCL-owned refineries because the daily local production is being hampered by poor investment.

“As long as the Federal Government continues to hold controlling shares in all the petroleum companies in Nigeria, there will be no crude oil and gas. Once the assets are transferred to private sector investors, the industry will shape up,” Kunle said.

He alluded to the fact that the country’s product pipelines are very weak and long out of use.

“There are too many cross cuttings issues in infrastructural framework. It is very highly likely that the Port Harcourt Refinery may not resume operations,” he said.

He noted that there is huge local add-on cost to a litre of petroleum products owing to inefficient and unreliable infrastructural facilities to support movement of products.

Energy economist, Prof. Wunmi Iledare, stated that the coming on stream of the Kaduna Refinery and others was gratifying.

According to him, refineries are designed for a crude oil type and product yields, therefore, the Kaduna Refinery, being designed for a heavy crude type, would need import from Venezuela and Saudi Arabia for bitumen and heavy fuel, which are for industrial use.

“The current economic reality is inconsequential if PIA 2021 is implemented according to the intent of the law and not necessarily the letter of the law with subjectivity,” Iledare said.

According to him, road and pipeline infrastructure will be a major challenge for the coming on stream of the Port Harcourt Refinery.

“I have a strong disposition to believe there are ongoing efforts to rehabilitate the roads and pipeline infrastructure to facilitate products distribution. There just has to be a credible plan to do just that if value is to be created from the refinery rehabilitation investments,” Iledare said.

Former President of the Chartered Institute of Bankers of Nigeria (CIBN) and Professor of Economics at Babcock University, Segun Ajibola, is worried over sustainability of supply to Kaduna Refinery and the profitability if the import should keep coming from Saudi Arabia or Venezuela.

The cost of production, according to him, may become unrealistic, thereby, impacting the sale at the pump.

He said that though the prevailing situation might push private refiners to import, the ability of NNPCL to effectively and efficiently manage such an arrangement is important.

Ajibola said: “I would have thought that a more sustainable strategy is to find solutions to the recurring challenges militating against crude oil production in the Niger Delta. I believe Nigeria has enough oil reserves. The time is ripe for a holistic approach to resolving the multiple challenges limiting oil-drilling operations in especially the Niger Delta. This may be a more enduring solution rather than a stop gap measure of crude imports.”

The expert also expressed worry over the planned coming on stream of the Port Harcourt Refinery, saying pipeline and roads have strong impact on lifting of products from the refinery.

Other experts also concurred that the state of the road from the refinery may stall evacuation of products from the facility.

Although Reynolds Construction Company (RCC) was seen on site last week working on the Eleme section of the East-West road, near the facility, it might take more than a year to make the road motorable again.

Communities are already being thrown into panic over the development, as they fear possible explosion of NNPC product pipeline or tankers.

In the face of huge subsidy payment that drained the country’s foreign exchange and sparked exchange rate problem to record worst, President Bola Tinubu, who had deregulated the downstream petroleum sector, announced that Port Harcourt Refinery would resume operation by next month.

For over six days, NNPCL spokesperson, Iyabo Abayomi-Ojo could not provide information on the exact plan of the corporation to ensure evacuation of refined products from the refinery.


Dangote Refinery

The Kaduna Refinery was designed to refine heavy crude, primarily from Venezuela and Saudi Arabia. The declaration by the Group Chief Executive Director of NNPCL, Mele Kyari and the Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, that the facility, being rehabilitated along with other assets for $2.2 billion would start work next year, is an indication that the state oil firm would have to import crude oil for its operation.

Abayomi-Ojo could not make clarifications on the planned importation, which could see the NNPCL transporting the crude with tankers from Lagos to Kaduna in the face of pipeline challenges.

Last month, after being accused of secretly awarding contracts to some northern companies, the NNPCL disclosed that some 16 companies were offered contracts to rehabilitate the pipelines. Oilserve Ltd, Chu Kong Steel Pipe Group Company Ltd, and Saudi Crown Oilserve, are to handle LOT one. LOT two is to be handled by MacReady Oil and Gas Services, COBRA Instalicios S.A, Control Y Montajes Industriales & International De Pipelines, Iron Products Industries Ltd, Batelitwin Global Services Ltd, BauenEmpresaConstructora SAU, Sanderton Energy Ltd and The Spanish National Association of Manufacturers. LOT three is to be handled by A A Rano, Zakhem Construction Nigeria, Bablinks Resources Ltd, and VAE Controls S.R.O. LOT four would be handled by MRS Oil and Gas, and CPPE Nigeria Ltd. The contracts are to be executed on Build, Operate and Transfer (BOT) agreements, as selected partners are to finance the rehabilitation. NNPCL was silent on the cost of the jobs, timeline for completion and how long the companies would operate the assets.

A pipeline expert, Osaro Gomba, told The Guardian in Eleme that there was no sign that product pipeline from the Eleme refinery was being repaired.

He warned that with the pipeline already facing serious integrity problems, the NNPCL could ignite serious explosion if products are transported through the pipeline.

The National President of Nigerian Association of Road Transport Owners (NARTO), Yusuf Othman, expressed worry over what he called persistent distribution challenges owing to bad road network and cost of diesel, while the Heavy Truck section of the National Union of Road Transport Workers within the South South, Southeast corridors comprising 11 states lamented that hauling products out of the region had remained a mirage.

Also lamenting the worsening state of road within the regions, especially Port-Harcourt into Benin, Benin into Okene in Kogi State, Calabar into Taraba and Enugu into Otukpo in Benue State, the Chairman of NURTW Monitoring Committee (South-South/South-East Heavy Truck), Muhammed Giwa, said over 15 members of the union had been kidnapped in the last few months by gunmen and that the group loses N194.4 billion yearly to illegal and multiple tax collectors.

https://guardian.ng/news/kaduna-dangote-bua-refineries-may-source-crude-oil-from-abroad/

Importing crude oil again?

Nigeria is still Paying the Price for bad government in the past

Imagine one of the world's largest producers of crude oil resorting to importation simply because corruption has made it impossible for them to meet their daily target of crude oil production.

I read somewhere that NNPC would sell crude oil to dangote in naira. So what's this issue of importing of crude we're hearing?

These people are just looking for an excuse to sell their fuel expensive when their refineries kicks off.

I read this report in the morning,and i think its not a well thought out report. The same news outlets reported some days ago that dangote refinery is going to get 6m barrel of crude oil in December from NNPC.Venezuela doesn't have extra crude oil to export,not to talk of 1m barrel to dangote and others.The sanctions imposed by the west on Venezuela, and the mismanagement from the govt of Nicolas Maduro has greatly affected the oil industry in Venezuela. The refineries in Nigeria must run on Nigerian crude.Even the noise over dangote refinery is simply unnecessary. I don't think dangote can do more than 200000 barrel per day in next one year.

Nigeria can't survive at the rate at which these snakes are inventing new ways to constrict the blood out of this nation ... They use all the education they source abroad to figure out brilliant strategies to serve the interest of the few at the expense of the many.

They don't even bother to hide it anymore.

May the Almighty inflict debilitating illnesses on every soul that had agreed to render this country hopeless

What APC can not ruin does not exist

Liefineries are being exposed. When will Nigeria be serious for once?

That's the problem...government holding a controlling share in oil firms. This was what happened to nitel until OBJ came and privatised it. Nitel was never efficient. We got our line for a huge sum through the eye of the needle in the early 90s yet, no improvement. Bills were always crazy. You'd hear an answering machine when you dialed to make an important call...you'd hear nitel special service information, the line you dialled is blablabla.

After privatisation of nitel, corruption fizzled and the federal government were making 5 times what they used to earn in revenue when nitel was still there. Gsm had also created employment to millions over the years. Someone like Slot and PTV would have still been fixing faulty laptop at computer Village today, had nitel not been privatised, which gave room for competition in the telecoms sector.

The same way nitel found it hard to declare profit back then, nnpc will never find it easy to declare profit until its privatised. The corruption in that sector is too much. Nnpc's account hasn't been audited in years yet, they call it NNPC Limited . Nigeria is the the most patient country on earth walai. In another country, all our corrupt leaders would either have been long forgotten by now or run to exile and never come back again.

In those days as an undergraduate, an engineer at nitel bought a toyota condor, tear rubber for his daughter who was my course mate on her wedding day...just an engineer. Same is happening in nnpc today and until that corporation is either scrapped or truly privatised, we're just deceiving ourselves in Nigeria. Tinubu knows what to do but he'd never do anything meaningful cos he's got no balls to challenge the powers that be. How would they earn revenues from their vessels taking crude abroad and bringing refined Petroleum products into the country? Their business would just be crippled.

When we were rooting for an independent candidate, someone who can step on their toes and nothing wouid be done or held against him cos he doesn't belong to their clique, they were calling us names. They went the tribal routes and played dirty. We will still learn but time isn't ripe yet.

Nigeria doings can make you start laughing or crying.

Islie:
• ‘It’s better to tackle challenges against local production’

• Doubts over Port Harcourt facility coming on stream next month

• Expert faults govt holding controlling shares in oil firms




https://guardian.ng/news/kaduna-dangote-bua-refineries-may-source-crude-oil-from-abroad/

Nigeria fit make you cry....
God forbid
Import crude?
As how na

From a business perspective, if Dangote wants to maintain a constant stream of crude oil, he has to look outside the shores of Nigeria. The market is too hostile!

😆 🤣 😂 😹 😆 🤣

Nigeria!! When you thought you have seen it all, Oil producing nation. Member of OPEC is planning to import crude oil. Are we really cursed or we are the cause of our problems?

We're just starting.

By the time they are done, Nigerians will regret voting in bad leaders.
Imagine importing what is grown in your backyard.

😂

I refuse to believe dis but if dis is true... I think we must be d most foolish people/nation on dis planet..... Don't tell me about d OPEC production qouta bullshit Pls.... We jst mumu...

If u say its our leaders, na your brothers and sisters be our leaders oh....

With all d profs we have in dis country we said NO to a man with PhD and elected a man who did not improve on himself since he left d army... Since 2015 d country has been on reverse

I don't understand. What do they mean by importing crude oil again?

sometimes I just don't understand how this country is been ruled aswear, everything just tire me, even the 35k wey government promise to pay workers as palliative don hook for air, na wa ooo

Who even believed Ph refinery will start functioning if not APC online miscreañts?


Now December deadline is in doubt... Rubbish.

When some of us doubt government promises, it's not that we ain't patriotic but we have come to reality. Watch out, after fixing it with billions of naira, not a single oil will be refined and no one will be held accountable.

Back to the topic, if they like let them import it from Mars, who cares?

APCheat

When Illegal Refinery Operators Can Get Crude Oil From The Niger Delta Region, What's NNPC Reason For Crude Importation?

This matter don get K-Leg. Leemao

Nigeria is finished, importing what we already have .... God how I take come this useless country.
If we dey import things must Crude oil follow too? 😢😥😡

I have said this several times, these clowns are not ready to bring any change to the a Nigerian situation.

They are just there to loot their owns and put a bandage over the Nigerian wound. .

Unless corruption is starkly addressed, we are not ready for any meaningful thing.

Antoeni:
When Illegal Refinery Operators Can Get Crude Oil From The From The Niger Delta Region, What's NNPC Reason For Crude Importation?

Red tapesm.

Corruption.

Misplaced priorities.

Lack of transparency. .

The kind of corrupt blockage and processes required for contracts under the NNPCl is gross and scary. .

Even, the devil himself go panic with fear within a Nigerian process.

There's Fire on the Mountain
Run Run Run

It is beginning to look like some people don't want Nigeria to work .... Despite all the Oil discovery here and there..

Funny
Buhari's govt celebrated oil in Gombe/Bauchi basin.
Almost half of our states are now oil producing. Yet we can't get oil for our local refineries
APC is the most deceitful party that ever ruled this country.
2015-2020 the excuse was falling oil price
2021-2023 it was crude oil theft and low oil production
Now 2023- .... the new excuse is we don't have enough crude to support our local refineries.
One now asks why NNPCL bought stakes in Dangote refinery?
Why was $1.5bn spent on repairing refineries we don't have oil to run?
Until Nigerians drive APC out of govt, Nigeria will not make headway.