HOW LACK OF FUNDS STALLED FG’S MODULAR REFINERY PLAN FOR NIGER DELTA – STAKEHOLDERS

Isaac Ombe

As the year 2018 ends, stakeholders in the oil and gas industry have taken a retrospective view at the sector, saying that “the modular refinery concept is a good idea but its implementation will be difficult under the existing

They consequently, advised the Federal Government to include budgetary provisions for offshore and onshore exploration activities in subsequent budgets to encourage new oil and gas

In an interview with the News Agency of Nigeria (NAN) in Lagos Friday, various stakeholders in the industry who reviewed oil and gas activities for 2018 also attributed lack of finance as the cause for abandoning the issue of modular refineries by some

Mr Biodun Adesanya, former President, Nigerian Association of Petroleum Explorationists (NAPE), said in 2018, there was noticeable improvement in the revenue generation occasioned by better oil price and less disruption in export

He advised that “In 2019, we should work harder to sustain and improve on the modest gains of 2018 especially the production and export infrastructures, as “they also need to conduct licensing

Commenting on the issue of modular refineries, Adesanya, who is also the Managing Director, Degeconek Nig. Ltd., urged government to develop the country’s modular refineries to reduce importation of refine petroleum

According to him, “the modular refinery concept is a good idea but its implementation will be difficult under the existing

“How would it resolve the challenges of the Niger Delta region, how will it be funded?
“How can the crude supply, be guaranteed, what currency will the crude be sold to the refineries, given that products will be sold in Naira,”

Mr Chikezie Nwosu, former Chairman, Society of Petroleum Engineers (SPE), Nigeria Council, said establishing fairly comfortable oil price should be of particular interest to the oil and gas industry in 2019 and

Nwosu who  observed that  the current uncertainty in global politics had effects on the global economy and that the  prediction of market trends was becoming increasingly difficult, pointed out that global political tensions had significant uncertainty to an already challenged oil and gas industry; demand versus supply

“The tensions between the USA and Iran, the Saudi Arabian issues, with the killing of the journalist Jamal Khashoggi and the withdrawal of Qatar from

“The trade tariff skirmishes between China and the USA, BREXIT and the sudden announcement of the total withdrawal of the USA from Syria, all added to the global tensions,” he

Predicating the budget, Nwosu said it depended to a large extent on oil revenues, adding that an oil price of 60 dollars per barrel seemed a bit

“A more realistic range will probably be between 40 dollars and 45 dollars per barrel, allowing for windfall receipts if higher, but also providing a hedge against lower oil

“Oil production from the current data as at September stood between 2.03 million barrels per day and 2.3 million barrels per day is

“This, however, provided the 2019 elections are peaceful and the results do not aggravate the Niger-Delta and host and impacted

“It will be good if all four key component bills of the Petroleum Industry Bill are passed by the National Assembly, and assented to by the Presidency, early enough in the year before mid-year

Nwosu said, that would bring the needed peace to the host and impacted communities, as they become partners in the exploitation of oil and gas resources.

According to him, it will also restructure the industry and NNPC to be more effective, with a world class governance structure. He said the bill would also attract the necessary direct investments, both local and

“Markets, including the oil and gas industry, do not like uncertainty and the PIB will go a long way to address the framework for doing business in the Nigerian oil and gas industry,” he

Nwosu said of particular importance was the full implementation of the seven big must wins, initiated by Dr Ibe Kachikwu and supported by Dr Maikanti Baru, which addresses many policy challenges in the

He said unlocking the huge potential of the gas resources would also help in diversifying and growing the Nigerian economy through its impact on power, agriculture and other

He said integrated Oil and Gas Field Development Plans (FDPs) must be emphasised by NNPC and some urban planning concepts must be

This, he said was to ensure that there was leverage on synergies of development by the various operators, especially in offshore developments, and significantly lowering unit technical

He said, to encourage investments in exploration, it was important for NNPC to insist that exploration and appraisal plans are an integral part of all

In his comments, Mr Emmanuel Iheanacho, Chairman, Integrated Oil and Gas Ltd., said that in the last 10 years, the demand for refined products had always been on the

Iheanacho while noting  that building a modular refinery of about 1,000 barrel cost over 1.2 billion dollars added that “Building a modular refinery is not easy, apart from citing your refinery beside the sea, one can as well site it near a marginal oil

According to him, “Finance is the major reasons why most investors in the modular refineries abandoned it, stressing  “No bank is ready to give loan to any investor in modular refineries that is why it is just only two out of 40 investors given licences that were able to build it. He advised that “Government should engage the banks to provide the finance needed for building modular refineries,” he

Speaking in the same vein, Mr Muda Yusuf, the Director-General, Lagos Chamber of Commerce and Industry, who urged the Federal Government to review its policy on refined products to encourage investors into the sector lamented thus:  “It is a pity that after many years of oil discovery, the country is still importing its refined products for

“As long as we have oil and gas sector link with the government, private investors will continue to evade the sector”, he further noted and urged the government to overhaul the sector to encourage private

While calling on the NNPC to repair the existing refineries to improve its production, Dr Saka Matemilola, former Chairman, Nigerian Council of Society of Petroleum Engineers, urged Department of Petroleum Resources not to revoke the licences of investors who were unable to build modular

He argued that withdrawing the licences will not solve the problems facing the sector; instead he advised government to work with the licence owners to address the issue of sourcing for finance from the banks to build the

NAN reports that the Vice President, Prof. Yemi Osinbajo, in June, confirmed that 10 modular refineries were at advanced stages of development in the Niger

The 10 modular refineries are located in five out of the nine states in the Niger Delta

The states include, Akwa Ibom, Cross River, Delta, Edo and Imo

Osinbajo said that two of the refineries, Amakpe Refinery (Akwa Ibom) and OPAC Refinery (Delta State) have had their mini-refinery modules already fabricated, assembled and containerised overseas and ready for shipment to Nigeria for installation. The total proposed refining capacities of the 10 licensed refineries stands at 300,000

Similarly, in November, the Minister of State for Petroleum Resources, Dr Ibe Kachikwu, said there are strong indications that three out of the 40 planned modular refineries would come on stream by end of 2019.

“Out of the 40 licenses issued, only 10 have shown progress by submitting their programmes and putting something on the ground. By end of 2019, we are assured that three private modular refineries would come on stream,’’ he said.