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Tag: refineries

  • Encourage modular refineries, Fed Govt advised

    Encourage modular refineries, Fed Govt advised

    The Federal Government has been advised to fast-track the take-off of modular refineries  to complement the four refineries in Port Harcourt (Rivers State), Kaduna and Warri, Delta State.

    The operators, who spoke at a forum in Lagos, said modular refineries were vital to the country’s development, despite the  government’s decision  to return the legacy refineries to optimal use this year.

    Abuja Power Station, Chief Executive Officer,  Jameel Jammal said the traditional refineries and the modular refineries should co-exist to ensure adequate production and supply of fuel in the country.

    He said the decision by the government to allow modular refineries to operate would increase local production and further engender competition in the industry.

    He explained that modular refineries are smaller in size, refine small crude, and easy to manage, adding that modular refineries are operating in developed economies, such as United States, and United Arab Emirates (UAE).

    He urged the government to approve firms that demonstrate reasonable level of commitment and capacity, adding the idea would ensure that only the best people operate modular refineries in Nigeria.

    According to him, there are modular refineries that have the capacity to produce between 30,000 and 50,000 barrels of crude per day, stressing that his company has a modular refinery that would produce even more barrels per day.

    The Department of Petroleum Resources (DPR) has just reduced the application fees for building modular refineries from $1million to $500,000  to enable more people to operate modular refineries.

    A don, Prof Adeola Akininisiju said the petroleum products production from the refineries is not in tandem with Nigeria’s population. He advised the government to license more operators to build more modular refineries in the country. When this happens, the country would be able to get enough fuel for socio-economic growth.

    He said it would take some time for the refineries to return to their initial refining of 450,000 barrels per day.

    Akininisiju, a Professor of Energy Economics, University of Ibadan said the government should consider to the establishment of modular refineries in view of the current  fuel challenges in Nigeria.

    The Nigerian National Petroleum Corporation (NNPC) said the refineries would resume production this year.

    The Corporation’s spokesman, Mr. Ohi Alegbe said the refineries in Warri, Port Harcourt and Kaduna will resume production next month after successful turnaround maintenance.

  • ‘Refineries to resume month end’

    ‘Refineries to resume month end’

    Nigeria’s refineries are expected to restart before the end of the month after attacks on their feedstock pipelines forced their closure in January, the head of refining at the state oil company said yesterday.

    The oil company halted crude flows to the refineries around mid-January after the key pipelines feeding the plants were attacked. The refineries were then shut down a few days later.

    The 150,000 barrel per day (bpd) Port Harcourt refinery is expected to restart its crude distillation unit on Saturday after receiving crude supplies by sea to be followed by a resumption in pipeline supplies. Meanwhile, it is able to produce gasoline from its fluid catalytic converter.

    “The Warri refinery has no crude. It will take close to 10 days to pile up crude stock and for Kaduna maybe we’re another five days away after that,” Dennis Ajulu, executive director of refining and technology at state oil firm NNPC, told Reuters.

    Ajulu said the pipeline to the 125,000 bpd Warri plant could be repaired in four days provided there were no security contraints, but expected it to take a bit longer and crude would be delivered by sea instead.

    The Kaduna refinery, which can only operate one of its two crude distillation units for now, receives its feedstock via the Warri plant.

    On top of being neglected for years, the refineries have always had supply problems due to attempts to steal oil via pipeline taps. It forced the state firm to switch to expensive crude deliveries by sea that cost more than $7 per barrel.

    Nigeria’s President Muhammadu Buhari is keen to revamp the plants in order to wean the country off gasoline imports but a return of some militancy in the oil-rich Niger Delta region could scupper these plans if the pipelines become regular targets.

  • PENGASSAN condemns calls to sell refineries as scrap

    PENGASSAN condemns calls to sell refineries as scrap

    The Petroleum and Natural Gas Senior Staff Association of Nigeria, (PENGASSAN) has condemned calls by the Independent Petroleum Marketers Association of Nigeria (IPMAN) to the Federal Government to sell the four refineries as scrap, describing it as sabotage.

    PENGASSAN, in a statement signed by its National Public Relations Officer, Comrade Emmanuel Ojugbana, said IPMAN’s suggestion was a fraudulent way of ripping the country off its national assets.

    The union supports the government’s efforts to ensure that the refineries are back on stream, especially with the report that the Kaduna and Port Harcourt refineries have satrted production.

    “Nigerians need to ask the IPMAN leadership why they want the refineries, which can be said to be in good form now to be sold as scrap. Even when the government has shown that the refineries can work and take care of 75 per cent of the nation’s local demand of refined products,” Ojugbana said.

    He said the proof that the refineries are still viable was exhibited by the Port Harcourt Refining Company (PHRC), which posted a net profit of N11.2 billion for December 2014, surpassing the 2013 figure of N3.2 billion.

    Ojugbana attributed this to the improved financial performance for the phased rehabilitation programme, which was done by the workers.

    “IPMAN should know that aside from the challenge of Turn-Around Maintenance of the refineries, inadequate and irregular supply of crude, which is the main feedstock, is another major impediment to the efficient and effective operation of the refineries,” he said.

    According to him, workers in the refineries are poised not only to produce refined products, but also to add the needed value to the crude oil, noting that the adverse effect of rationing or not feeding the plant with crude oil was that the plant remained idle for a long time.

    “When the plant is idle for too long, this breeds residual faults and problems whenever there is an attempt to start up, since the design of a refinery is better when it is continuously operated. We are again demanding adequate and regular supply of crude to the four refineries to alleviate the suffering of Nigerians and reduce or eliminate subsidy payment, considering the plunge in global oil prices,” Ojugbana said.

    PENGASSAN also challenged the government to grant the managements of the refineries autonomy for effective accountability while sustaining the rehabilitation process already initiated.

    “If any of the refineries fails to pay back the funding (if granted financial autonomy) and refuse to make commensurate returns to the Nigerian National Petroleum Corporation (NNPC) within one year, the government is free to apply appropriate sanctions,” he said.

    Recently, Minister of State for Petroleum Resources and Group Managing Director, NNPC, Dr Ibe Kachikwu, said the refineries would not be sold; rather that they would make direct payments into the Federation Account from the year.

    Kachikwu said the NNPC was adopting a plan that would give the refineries some sort of autonomy, without privatising them.

  • PENGASSAN opposes sale of refineries

    PENGASSAN opposes sale of refineries

    Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has opposed the sale of the refineries as scrap as suggested by the Independent Petroleum Marketers Association of Nigeria (IPMAN), saying it is a fraudulent way of stripping the country of its national assets.

    PENGASSAN’s National Public Relations Officer, Comrade Emmanuel Ojugbana, described the call by IPMAN as sabotage against national interest.

    He lauded the efforts of the government in ensuring that the four state-owned refineries are back on stream, especially with the recent report credited to the Minister of State for Petroleum Resources, Emmanuel Ibe Kachikwu, that the Kaduna and Port Harcourt Refineries will soon commence production.

    Ojugbana said: “Nigerians need to ask the IPMAN leadership why they want the refineries, which can be said to be in good form now to be sold as scrap. Even when the government has shown that the refineries can work and take care of 75 per cent of the nation’s local demand of refined products.”

    He said the proof that the refineries are still viable and profitable was exhibited by the Port Harcourt Refining Company (PHRC), which posted a net profit of N11.2 billion for December 2014, representing N8.2 billion or 250 per cent above the N3.2 billion posted by the company in preceding November, 2014.

    “This was attributed to the improved financial performance for the phased rehabilitation programme, which was done by the workers,” stating that  the challenge confronting the functionality of the refineries is not the ownership. “We have examples of countries even in West Africa, such as Ghana and Chad Republic, just to mention a few where refineries are owned by the government. The refineries in those countries are not only functioning, but Nigeria even imported from them in the past.

    “IPMAN should know that aside from the challenge of Turn-Around Maintenance (TAM) of the refineries, adequate and regular supply of crude which is the main feedstock is another major impediment to the efficient and effective operation of the refineries,” he said.

  • Legal issues in destruction of illegal refineries

    SIR: Over the years, the federal government, via her Military Joint Task Force (JTF) has boasted of total clampdown activities on illegal refinery operators and/or oil thieves. It is not uncommon today to read or listen to reports on papers or telecast on how the JTF in Rivers, Bayelsa, etc, states have destroyed several illegal refineries.

    To state that there are laid down laws, rules, and regulations for virtually every activities of Nigerians vis-à-vis the government and vice versa is to state the most obvious. Ranging from the constitution to all other Acts and Laws made pursuant to it, actions and/or inactions criminalized and how to bring perpetrators to justice are clearly stated.

    There are laws regulating the operation of refineries in Nigeria even to the extent that violation of such laws is accordingly sanctioned. The principal enactment on the subject matter is the Petroleum Act, Cap P10, Laws of the Federation of Nigeria (LFN), 2004 which provides in Section 3(1) that “No refinery shall be constructed or operated in Nigeria without a licence granted by the Minister.” Subsection (4) of the same section further provides that “the provisions of this section are additional to the provisions of the Hydrocarbon Oil Refineries Act.” The Hydrocarbon Oil Refineries Act, Cap 45, LFN, 2004 on the other hand provides in its section 1 that “subject to the provisions of this Act, no person shall refine any hydrocarbon oils save in a refinery and a license issued under this Act…”

    From these provisions, any place or facility used for the purpose of refining oil but without the requisite license is an illegal refinery.

    To determine whether a refinery is legal or otherwise, it must first be established that the operation is without the lawful licence envisaged by sections 3 and 1 of the Petroleum Act and the Hydrocarbon Oil Refineries Act respectively. Assuming that this first hurdle is usually crossed in the apprehension of the operators of illegal refineries across the country, the next hurdle is that which is expected by law to be done in the circumstance.

    Section 7(1) and (2) of the Hydrocarbon Oil Refineries Act provides as follows: “any person who refines hydrocarbon oils in contravention of the provisions of section 1 of this Act shall be guilty of an offence, and shall be liable – (a) on summary conviction, to a fine of not less than four hundred naira or more than two thousand naira or to imprisonment for a term of two years, or to both; (b) on conviction on indictment, to a fine of an unlimited amount or to imprisonment for a term not exceeding five years, or to both. (2) Any hydrocarbon oils in respect of the refining of which a person is convicted of an offence under this section shall be liable to forfeiture.”

    By the way, the penalty of fine prescribed by section (7) of the Hydrocarbon Oil Refineries Act leaves so much to be desired and goes to show how archaic our laws can be and how our legislature is hardly interested in updating our laws to meet current realities.

    From section 7 of the Hydrocarbon Oil Refineries Act, one thing is clear, the law expects that any person accused of operating an illegal refinery must go through the process of criminal trial to warrant conviction then, be faced with the legal punishment. It is crystal clear that the law does not envisage setting ablaze illegal refineries upon apprehending the operators.

    Aside the fact that the destruction is done in contravention of the law by the government itself, regard is never hard to the consequences of hydrocarbon fire (as a result of burning the illegal refineries) on the environment as well as human health. Need we be reminded that the environment in question is already subjected to all manner of degradation ranging from gas flaring to oil spillage among others?

    Is the government aware of the dangers of hydrocarbon fire on the environment and human health? When the law enforcement agents are the law breakers themselves, to whom do we run?

     

    • Ekpa F. Okpanachi,

    Anyigba, Kogi State.

  • ‘Two NNPC refineries may be streamed this month’

    ‘Two NNPC refineries may be streamed this month’

    • Pipelines vandalised  27, 967 times

    The Minister of State for Petroleum Resources, Dr. Emmanuel Ibe Kachikwu, has said two of the state-run refineries may be re-streamed before the end of this month.

    A statement endorsed by  Group General Manager, Group Public Affairs Division, Nigerian National Petroleum Corporation (NNPC),  Mr. Ohi Alegbe yesterday explained that the minister said based on available reports, the refineries may come alive again.

    “On the current state of the refineries, Dr. Kachikwu stated that from the available reports before him, two of the refineries may be re-streamed before the end of December, 2015,” the statement read.

    It added  that efforts are on to engage private investors to build new refineries within the old ones to enable the refineries share power, pipelines and other resources.

    The statement explained that Kachikwu spoke  during an interactive session with members of the National Assembly in Abuja.

    The minister said the menace of pipeline vandalism has led to huge losses of oil and petroleum products, lamenting that the pipelines were vandalised 27, 967 timwes over the last few years.

    He said unutilised pipelines and poor pipeline integrity also led to high cost of trucking and its attendant destructive impact on the roads.

    Dr. Ibe Kachikwu expressed his readiness to work closely with the National Assembly to ensure the speedy growth and development of the oil and gas sector for the benefit of the entire country.

    In a presentation titled: ‘The Roadmap for Nigeria’s Oil and Gas Sector,’ Dr. Kachikwu said the average national oil production as at July this year stood at 2.1 million barrels per day (bpd) and the Nigerian Petroleum Development Company (NPDC) equity production is 99,000 bpd.

    He said the declining Joint Venture reserves were due to inadequate and low investment in oil assets, stressing that the issue of funding constraints must be addressed going forward with the collaboration of private and international investors.

    The minister said the average gas to power generation is about 3,000 megawatts (Mw) and domestic gas supply of one billion standard cubic feet (scf) with the contribution of 600 million scf from the NPDC.

    He said the new agenda for the oil and oas industry is centered around having the right people doing the right things at the right time for the right purpose to yield the right results.

  • NUPENG urges FG to fix refineries, address fuel scarcity

    NUPENG urges FG to fix refineries, address fuel scarcity

    The Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) have urged the Federal Government to fix the four refineries in the country in other to curb constant fuel scarcity.

    The union also urged the government to ensure the protection of pipelines while curbing illegal bunkering.

    National President of the union, Igwe Achese, who said this on Sunrise Daily, a breakfast programme on Channels Television, on Monday, added that Nigeria would continue to experience scarcity of fuel because the distribution and marketing of the products have been mortgaged in the hands of few individuals.

    He said: “I have said clearly over some months that the scarcity we are experiencing today will continue because we have mortgaged the petroleum product distribution marketing system into private homes, individuals in the name of privatization.

    “What we need to do is one; put our refineries in other. And I ask myself how much that will cost us to carry out complete turnaround maintenance. Turnaround maintenance is between three to four months and you are aware that this turnaround maintenance has been an issue for the past 15 years. And every year we keep hearing we have spent so billion in turnaround maintenance and yet we are no there.

    “Two is to make sure that our pipelines are also been protected, very well secured and to make sure that petroleum products or crude oil are being haulage through these pipelines to the refineries.

    “And then we need to tackle illegal bunkering. Government should sit up in fighting illegal bunkering. I ask myself, ‘the vessels that are being used to carry or lift up this crude oil are they being charms that cannot be seen by the eyes? These are big vessels that are visible and can be seen.”

    Achese said that the Obasanjo administration introduced petroleum subsidy in 2006 as a measure to carry out turnaround maintenance on the refineries.

    He added that Nigeria now depended completely on the importation of petroleum products.

    Achese said: “Who introduced petroleum subsidy into the system and for what purposes? You and I know very well when subsidy was being introduced in 2006 he clearly stated the terms of why subsidy was being introduced. He said look let us see a turnaround of the refineries and for us to do a turnaround of the refineries let us a lot importation of fuel to come into this country as a stop gap measure not as a dependent processes.

    “Today it is a process we are depending on now. It was a stop gap measure and that stop gap measure today is no more a stop gap measure. We are now depending on importation of petroleum product completely. If you look at the current situation we are today, we are yet to be told the exact amount of money being paid as subsidy. Because there is subsidy in demurrage, we have subsidy in de- haulage.”

  • DPR undertakes research on refineries

    DPR undertakes research on refineries

    To encourage the growth of the downstream sector of the petroleum industry, the Department of Petroleum Resources (DPR) has carried out a research on the refineries to determine their actual production level and what are required for optimal output, its Director, Mordecai Ladan, has said.

    He said the development became necessary to ascertain their capacities vis-à-vis the volume of petroleum products that would adequately cater for the needs of consumers.

    Ladan, who spoke at a panel session during the just-concluded Oil Trading and Logistics (OTL) Expo in Lagos, said effective refineries were crucial to the growth of the downstream segment of the oil and gas industry, adding that DPR was working towards recording success in that regard.

    Represented by the Deputy Director in-charge of Engineering and Standards, Mr. Olumide Adeleke, the DPR chief, said the industry had been battling with problems, such as availability and transportation of petroleum products. He said the problems would be resolved soon.

    He said: “When you talk of availability of petroleum products, you need to talk about transportation of the products vis-à-vis the quantity or volume of the refined products. In DPR, we have done a considerable level of analysis or findings on the refineries required to meet the growing demands of domestic consumers.”

    Ladan said transporting crude oil to the existing refineries was a problem, which the industry was grappling with. He noted that pipelines through which crude oil and petroleum products are transported by stakeholders in the value chain are old.

    He said the obsolete pipelines need to be replaced  as part of efforts to encourage growth of the industry. He explained that the operating environment is not conducive enough for operators in the oil and gas sector, stressing that the development inhibits its growth.

    “The government has to come in, by providing an environment that is conducive for investment. There should be some form of regulations to stimulate growth in the industry. There is the need to develop a policy in the direction of safety of the environment. The environment should be secured with a view to discourage pipeline vandals,” he added.

    Also, the Managing Director, Mobil Oil Nigeria Plc, Mr. Tunji Oyebanji, said investment in local refineries is key to the growth of the downstream sector, adding that private refineries are yet to come on stream, years after obtaining approval from the Department of Petroleum Resources.

    This, according to him, is due to lack of funds, arguing that banks are not ready to advance credit to them for reasons best known to them. He added that many of the operators have assets they can present as collaterals, but they do not have cash. “The problem of the companies approved by DPR to operate refineries is not collaterals, but cash. That accounts for the reason why local refineries have not taken off in the country,” Oyebanji said.

  • DPR undertakes research on refineries

    To encourage the growth of the downstream sector of the petroleum industry, the Department of Petroleum Resources (DPR) has carried out a research on the refineries to determine their actual production level and what are needed for optimal output, its Director, Mordecai Ladan, has said.

    Ladan said the development became necessary to ascertain their capacities vis-à-vis the volume of petroleum products that would adequately cater for the needs of consumers.

    Ladan, who spoke at a panel session at the just-concluded Oil Trading and Logistics (OTL) Expo in Lagos, said effective refineries were crucial to the growth of the downstream segment of the oil and gas industry, adding that DPR was working towards recording success in that regard.

    Represented by the Deputy Director in-charge of Engineering and Standards, Mr. Olumide Adeleke, the DPR chief, said the industry had been battling with problems, such as availability and transportation of petroleum products. He said the problems would be resolved soon.

    He said: “When you talk of availability of petroleum products, you need to talk about transportation of the products vis-à-vis the quantity or volume of the refined products. In DPR, we have done a considerable level of analysis or findings on the refineries required to meet the growing demands of domestic consumers.”

    Ladan said transporting crude oil to the existing refineries was a problem, which the industry was grappling with. He noted that pipelines through which crude oil and petroleum products are transported by stakeholders in the value chain are old.

    He said the obsolete pipelines need to be replaced  as part of efforts to encourage growth of the industry. He explained that the operating environment is not conducive enough for operators in the oil and gas sector, stressing that the development inhibits its growth.

    “The government has to come in, by providing an environment that is conducive for investment. There should be some form of regulations to stimulate growth in the industry. There is the need to develop a policy in the direction of safety of the environment. The environment should be secured with a view to discourage pipeline vandals,” he added.

    Also, the Managing Director, Mobil Oil Nigeria Plc, Mr. Tunji Oyebanji, said investment in local refineries is key to the growth of the downstream sector, adding that private refineries are yet to come on stream, years after obtaining approval from the Department of Petroleum Resources.

    This, according to him, is due to lack of funds, arguing that banks are not ready to advance credit to them for reasons best known to them. He added that many of the operators have assets they can present as collaterals, but they do not have cash. “The problem of the companies approved by DPR to operate refineries is not collaterals, but cash. That accounts for the reason why local refineries have not taken off in the country,” Oyebanji said.

  • Why refineries are always in bad shape —Ex-NNPC chief

    Why refineries are always in bad shape —Ex-NNPC chief

    A former top shot of the Nigerian National Petroleum Corporation (NNPC), Barrister Paul Ajetunmobi, has attributed the bad conditions of the nation’s refineries to obsolete laws inhibiting their smooth operation.

    Ajetunmobi who recently retired as the Human Resources Manager of Warri Refinery and Petrochemical Company, told The Nation in an interview that the bad conditions of the refineries would persist unless steps were taken to change existing laws that make it difficult to do their turnaround maintenance as and when due.

    He said by the Petroleum Act of 1977 that set up the NNPC, there are legal issues that are yet to be fully resolved, which are giving the corporation some of its current challenges.

    The NNPC, he noted, is seen as a public service establishment guided by public service rules,” which means, for instance, that it cannot just go to the bank to borrow money to do things like other companies, whereas in the oil industry, money plays very critical roles.”

    He also said there are other impediments other impediments experienced by the NNPC which are not found in other privately-driven establishments.

    He said: “I spent the last ten and a half years of my service at the NNPC in the refineries. The head of refinery has an authority limit.

    “The limit at the time was about N5 million, which is less than $30,000 by today’s exchange rate, while there are equipment within the refinery worth about $500,000 or even one million dollars.

    “But by the authority limit of the managing director, he cannot approve more than $30,000. So he has to approach the corporate headquarters.

    “But you would find that even at the corporate headquarters, the authority limit of the Group Managing Director is just about N50 million, which is not more than $250,000.

    “A refinery is a multi-billion dollar project. For instance, if a compressor has a problem and you want to fix it, you will need about $150,000. But because of the challenge of the authority limit of the MD of the refinery, he has to apply to the corporate headquarters of the NNPC.

    “And when he gets to the corporate headquarters, even the GMD cannot approve it. He has to take it to the Presidency for approval.

    “In the end, something you need to fix within a week or two would be there for two or three years. And you know the refinery is an industry that has to work 24/7.

    “Once a refinery starts working, it works non-stop day and night, unless there is a problem. So, you can imagine metals hitting one another sometimes up to a temperature of about 300 degrees or 500 degrees centigrade, and when they break down, you have to wait for approval to repair or replace them. “That is why we have the challenge of not having regular turnaround maintenance in NNPC.

    “Refineries work non-stop for one or two years. So, by the statutes, turnaround maintenance is supposed to be done every two years.

    “But you have a situation where there will not be turnaround maintenance for five, seven or ten years. The machines are bound to break down.”

    He said the refineries are also bogged down by the fact that those who have no knowledge of the industry are given contracts by the powers that be to supply the equipment.

    “Contracts for materials like the caustic soda or the acid they use in refining crude oil are given to people who have no knowledge of the industry because of the Nigerian factor.

    “The corruption in the system is really impacting negatively on the refineries, but the staff and management of the NNPC are being blamed for it,” he said.