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Upstream oil firms to refine 20% crude produced locally


The Federal Government has unveiled plans to reel out a new policy that will require operating companies to refine locally at least 20 per cent of the crude oil they produce in the country.

The new measure is aimed at boosting local petroleum refining capacity, create jobs and reduce the huge amount the country is spending to import petroleum products by bridging the supply gap in the domestic market.

The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, who was quoted as giving this hint in a statement issued by the Nigerian Content Development and Monitoring Board (NCDMB), said that the planned 20 percent local refining percentage requirement for the companies would be raised to 50 per cent in the next five years.

Ibe Kachikwu
Ibe Kachikwu, Minister of State, Petroleum Resources

While making the government’s position known at the ground-breaking of a modular refinery being developed by Waltersmith Refining and Petrochemical Company in Imo State, Kachikwu explained that Nigeria had “no option or we will consistently stay in the abyss of lack of processing, while we export all the raw materials.”

The modular refinery project, which has a capacity of 5,000 barrels of crude oil per day and is projected to commence production in December 2020, is being funded with 30 percent equity by the NCDMB and an additional $35 million debt facility from the African Finance Corporation (AFC).

The minister described the government’s policy on modular refineries as an integral part of the 14-point agenda for reducing militancy as well as creating jobs in the Niger Delta region.

He hinted that remarkable progress had been made in the execution of 10 out of the 38 modular refineries with the first one expected to start delivering products between December 2018 and January 2019.

Kachikwu projected that from the modular refineries which have been granted free customs duty charges and other waivers to enable the investors to bring in their equipment, Nigeria would be able to process about 200,000 barrels of crude for the domestic market

This is even as he restated government’s determination to get the four state-owned refineries fully turned around by 2019, with a target of processing about 500,000 barrels of crude oil daily.

The minister described the continued importation of refined petroleum products as wasteful to the country in terms of the foreign exchange being used for it and the loss of jobs.

Commenting at the launching ceremony, the Executive Secretary, NCDMB, Mr Simbi Wabote, said that the board’s decision to invest in the Waltersmith’s modular refinery was in line with the board’s vision to be a catalyst for the industrialisation of the Nigerian oil and gas industry and its linkage sectors.

The NCDMB boss said: “We stand with the desire of the Federal Government to give effect to the recent pronouncements on the establishment of modular refineries.

“Beyond our interventions in the local supply chain for in-country capacity utilisation, we have broadened our focus to include in-country resource utilization”, Wabote added.

According to him, the NCDMB is considering more modular refinery project proposals with a range of 1,000bpd to 5,000bpd in line with its published guidelines.

He maintained that new modular refineries that would be supported by the board should have 70 percent of their components fabricated locally, pointing out that Waltersmith project was permitted to fabricate some of the components in Houston Texas, United States, because this is the first time such a project will be executed in the country.