Fuel Scarcity: Can modular refineries help bridge the petrol supply gap?

It is now close to a month since queues remerged in Nigeria’s petrol stations. The reasons given for this situation that has cast a heavy burden on the people and dampened the Christmas holiday are not new. From panic buying to weather to inadequate supply to depots and NNPC being the sole importer of the product.

Other consistent reasons that precede petrol crises are explained as rumours of plans by the Federal Government to increase pump price of petrol and threats of industrial action by petroleum workers unions.

In the midst of all this, the real conversation is lost and the critical question never really asked…why is it impossible for Nigeria to refine its own crude oil to produce petrol and other products that it consumes daily?

Minister of state for petroleum resources, Ibe Kachikwu has made several promises and announced that refineries have worked to varying degrees of their installed capacities. Yet there has been very little evidence that any of these announcements hold water.
When Kachikwu visited Eleme Local Government Area in Rivers State for the recommissioning of the crude line from Bonny to the Port Harcourt refinery in 2016, he gave a ball park figure of $700 million as cost for the upgrade of all four refineries.
This is usually followed by the argument that Nigeria simply does not have that kind of money lying around. But what is puzzling is that when you consider the trillions of Naira and tens of billions of dollars that the NNPC is often accused of either mismanaging or not remitting the argument becomes difficult to swallow.
Added to that, you can consider other sources of funds. Nigeria has over $2 billion dollars in its excess crude account which once held upwards of $30 billion while the refineries remained in the same state.
$1 billion of that will soon be withdrawn to fund the fight against insurgency. 
The President also recently requested to borrow $5.5 billion to ease the nation’s infrastructure deficit. How much of that will go into turn around repairs for the refineries, if any a all, is unclear.
It is interesting though that the Vice President Professor Yemi Osinbajo announced just before Christmas 2017 that 10 modular refineries were ready to come on stream and would be colocated to share resources with the larger ones in the Niger Delta.

Osinbajo said that two of the refineries, Amakpe Refinery (Akwa Ibom), and OPAC Refinery (Delta State), have their mini-refineries modules already fabricated, assembled and containerized overseas, ready for shipment to Nigeria for installation.

The total proposed refining capacities of the 10 licensed refineries stands at 300,000 barrels. “Advanced stage of development for the modular refineries means that the projects have passed the Licence to Establish (LTE) stage, while some have the Authority to Construct (ATC) licence or close to having it because they have met some critical requirements in the Licensed stage.

“There are three stages in the process of refinery establishment; Licence to Establish (LTE), Authority to Construct (ATC) and Licence to Operate (LTO).’’

The Vice President believes the modular refinery initiative which featured prominently in recent talks between the Federal Government and the oil-producing areas, as represented by PANDEF, will also reposition the petroleum industry.

Can modular refineries help bridge the petrol supply gap?

This is a question I put to Sunny Atumah, columnist for Oil and Gas with The Vanguard Newspaer and Ekanem Isichei the CEO of ACIOE Associates, an oil and gas company who shared their views on this just before the return of long queues.

This is the theme of the first podcast of Stanley Bentu Online. Please join the conversation by leaving your comments below.


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