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Nairaland Forum / Nairaland / General / Business / Fate Of Small Refineries Uncertain As Dangote Pushes Ahead (227 Views)
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Fate Of Small Refineries Uncertain As Dangote Pushes Ahead by prof2007: 5:34am On Oct 04, 2019 |
The fate of many small refinery projects in the country hangs in the balance while Dangote Industries Limited pushes ahead with its massive project. While 44 refinery licences have been given to private investors, only a few projects, including the one being built by Dangote Industries Limited in Lagos, are underway. Niger Delta Petroleum Resources Limited is the only company that has been able to establish and run a refinery. It has a 1,000 barrels-per-day refinery at Ogbelle, Rivers State and it is working to expand the processing capacity to 6,000bpd and later to 11,000bpd. According to the Department of Petroleum Resources, there are a total of 38 proposed modular refineries with capacity ranging from 5,000 bpd to 30,000bpd, and six conventional plants with a total capacity of 1.35 million bpd. It said 24 out of the 44 companies were still sourcing funds as of April 2018, some of whose licences to establish had expired, adding that 20 licences were active. In August, the Nigerian Content Development and Monitoring Board (NCDMB) said it was providing equity investment for establishment of two modular refineries in Imo and Bayelsa states. It said the 12,000 barrels-per-day modular refinery being constructed by Azikel Petroleum Limited in Bayelsa would come on stream in 2021. It said the 5,000bpd modular refinery being built by Waltersmith Refining and Petrochemical Company Limited in Imo was on track for completion in May 2020. The National Refineries Special Task Force, which was set up by the Ministry of Petroleum Resources in 2012, said it examined 35 greenfield private refinery licensees/applicants, and only seven were found to have reasonable potential. The taskforce said it was evident most of the applicants for a refinery licence did not have requisite experience and background in petroleum refining and marketing. It said, “Their technical capability is rather doubtful and their ability to attract the quantum of funds required for refinery projects, running into billions of naira, is questionable. Besides, in many instances, potential financiers evidently insisted on crude supply agreements at rates below international market prices, owing to the prevalent subsidised products pricing regime, as a condition for further consideration of funding applications.” Aliko Dangote, Africa’s richest man, is building a refinery with a capacity of 650,000bpd, described as the world’s biggest single-train facility. The refinery can meet Nigeria’s requirement of all liquid products, such as petrol, diesel, kerosene and aviation fuel, and will have a surplus of each of the products for export, according to Dangote Industries Limited. On July 29, Sinopec Corporation announced that the world’s largest atmospheric tower, a piece of equipment that will process crude oil for Dangote refinery, had set sail from China to Nigeria. “It doesn’t pose any threat whatsoever to smaller refineries. The modular refineries will complement it because the 650,000 bpd cannot meet Nigeria’s requirement on its own. It might be a threat to people who are bringing in products to Nigeria,” the Chairman, Eko Petrochem and Refining Company, Capt. Emmanuel Iheanacho, told our correspondent. Iheanacho’s company is working towards building a 20,000bpd modular refinery in Lagos. In 2017, it announced the signing of a grant of $797,343 by the United States Trade and Development Agency for the project. “We have finished everything we need to do by way of planning. To build a refinery is not an easy business; it involves a lot of planning, articulation and interaction with government officials, communities and other stakeholders. We have obtained the DPR’s approval to construct,” he said. According to Iheanacho, a budget of about $250m is needed to build a 20,000bpd to 24,000bpd refinery. “We need to raise finance. The problem is that Nigerian banks do not have sufficient capitalisation to lend one person that kind of money at the required single digit interest rate and for an extended period of eight to nine years. We are deeply into our fundraising activity,” he added. He said the grant from the US agency was very useful, adding, “It was for the articulation of the detailed engineering, and we have finished it.” An energy lawyer and Partner at Bloomfield Law Practice, Mr Ayodele Oni, said many of the modular refinery projects would not come on stream, describing them as unbankable. According to him, the Dangote refinery does not constitute a substantial threat to the smaller refineries. He said, “I think the prospects of the modular refineries are fairly okay. There can be a quota system for all the refineries where every plant has a quota. It depends on what government policy will be at that time. “A few of them that will come on stream will have their strategies, even if it is to sell to other African countries. Many of them will not come on stream; they won’t even reach financial close.” An energy expert, Mr Bala Zakka, said many people had misconstrued modular refineries as a necessity in order to bridge the refining gap in the country. He noted that many people who went for the modular refinery licences didn’t have the technical competence or financial capacity. He said, “Modular refineries are supposed to be for people who want to go into refining business but don’t have the financial capacity for large refineries or want to target a particular product such as diesel or aviation fuel. I don’t want to believe that Dangote refinery will be a threat to the modular refineries. We don’t yet know the marketing model Dangote refinery intends to adopt or apply when it starts working. We don’t know the target market. It’s too early to begin to think it will be a threat to smaller refineries. Those who want to build modular refineries should go on.” Between 1976 and 1989, the Federal Government, through the Nigerian National Petroleum Corporation, built refineries in Port Harcourt, Warri and Kaduna, in addition to an existing refinery in Port Harcourt, which was built by Shell in 1965 (later bought over by the NNPC). But the state of the 445 million-bpd refineries has worsened over the years and no new refinery has been built by the government since 1989. The Group Managing Director, NNPC, Mr Mele Kyari, said in August that the corporation was committed to revamping the refineries to enable them to “work to an appreciable level or capacity,” with a plan to make the country a net exporter of petroleum products by 2023. “The combination of the output of the modular refineries, government-owned refineries and Dangote refinery will serve to supply the nation and make Nigeria the centre for export of products to countries in West Africa and elsewhere,” Iheanacho added. SOURCE: https://punchng.com/small-refineries-fate-uncertain-as-dangote-pushes-ahead/ |
Re: Fate Of Small Refineries Uncertain As Dangote Pushes Ahead by rottennaija(m): 6:23am On Oct 04, 2019 |
There is still hope in Nigeria. We need more of these, just ensure you don't flare the gases but process it for use by gas turbines. In fact, that should be a major caveat in any refinery to be built in Nigeria. |
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