The Nation Newspaper

Tag: refinery

  • $300m bio-fuel refinery coming soon

    Plans are underway to establish a bio-fuel refinery worth $300million in Nigeria, the Special Adviser on Private Sector to President Goodluck Jonathan, Prof Chris Boyejo, has said.

    Boyejo, in a statement made available to The Nation, said a Russian firm ‘’OOO Bio- Resurs and some Nigerian oil companies, are partnering on the deal.

    He said: “The scheme is designed to commence immediately with the building of a 30,000 ton bio-diesel installation plant. This will be preceded with the planting of the cash crops that would be used for the production. Research has shown that bio-fuel is environmentally-friendly and the viscosity makes engine run longer and faster.

    ‘’Bio-fuel is the in-thing in Europe, America and Asia and the plant is Euro-certified. The invention has been well tested in some European, American and Asian countries. The bio-plant will produce: diesel, petrol, aviation fuel and kerosene. The total cost of the project is cheaper and the technology is safer, stronger and set to beat any other in the whole world.”

    Boyejo said the partners were yet to disclose the area where the project will be cited in Nigeria.

    He said the first part of signing of agreement between the partners have taken place, while the final signing will take place in Krasnodar, Russia.

    “It is expected that this project will aid the process of diversifying the economy and aid the Federal Government transformation agenda. It is expected that full work will commence at the site to be named in January 2014,” he added.

  • Niger’s refinery to the rescue

    Whose who enjoyed the tutelage of their mothers in the pre-teen years would keep recalling rich, wise sayings throughout their lifetime. Yes, sayings they either never understood or dismissed offhandedly those good old days would bob up in adulthood with fresh, new meanings. One of such that comes to Hardball now is what mama was fond of saying when we behaved brusquely in public: “He who has no shame is bound to be a brigand,” she would always warn. Haba mama, how could that be? One would bounce it off, quickly returning to one’s childhood matters of urgent concerns.

    But Hardball has determined that there is a truism to that mama’s maxim and applying it to the Nigerian context, one can safely say that most of our public officials don’t have shame therefore we have a festival of brigands loosed upon the polity. Let us zero in to the issue at hand which is the news that Niger Republic’s refinery now supplies fuel to northern states of Nigeria. The 20,000 barrels per day (bpd) Soraz Refinery which is located about 900 kilometres off Niamey, the Nigerien capital is the source of the petroleum products used in Katsina, Bauchi, Sokoto and Jigawa, among other states.

    It is said that Niger Republic needs no more that 5000 to 7000 bpd thus the surplus of about 13,000 bpd is daily moved across the border to the states of the north. The wretched, land-locked, arid country of Niger that has no significant hydrocarbon deposit has suddenly become a significant petroleum products exporter to Nigeria to the point that Bauchi State which probably has a higher per capita income than Niger is contemplating an independent power plant that would rely on one of the by-products of the Soraz Refinery, (Low Pour Fuel Oil) to run.

    Yet Nigeria has four refineries – two in Port Harcourt, one in Warri and one in Kaduna; they have a combined capacity of 445,000 bpd but Nigeria, this giant of Africa cannot run them and it does not know what to do with them. As you read this, it is taken that these four behemoths have zero production and Nigeria imports her daily consumption of about 38,000 litres of petrol as well as diesel, kerosene, aviation fuel, fuel oils etc. The accursed state oil conglomerate, the Nigerian National Petroleum Corporation (NNPC), currently imports 33 percent while oil marketers ship in the balance of about 67 percent making up a multi-billion dollar petroleum products racket that is not known in any other part of the world.

    Recently there was a glut from the importing binge going on and nobody can even tell if the supply from Niger is the cause of the crisis of unconsumed product imports. If only the Nigerien government would be smart enough to build another 30,000 bpd refining facility in Niamey and they would wipe off our worthless NNPC and throw our oil sector into total crisis. Nigeria has four refineries which are near moribund and lying waste yet there is a private initiative to build Africa’s largest refining and petrochemicals facility in Olokola, Ondo State. Pray what happens to the foursome when this new initiative becomes functional – it would probably be cannibalized and scrapped. Oh what a country with shameless leaders!

    Mama was right that a shameless person is easily given to banditry and that is exactly what is going on in the Nigerian oil sector in the past few years especially since the tenure of the current petroleum ministry. The minister is merely wading through the office clueless and full of mischief. For more than two years, she has not brought any positive impact to bear on the oil industry instead we have reaped a harvest of scandals and unbridled corrupt practices. History will remember her as the worst oil minister Nigeria ever had, the very person who bastardized the system to the point that Nigeria now imports petroleum products from Niger Republic.

  • Success of Dangote’s $9b refinery depends on govt, say operators

    The latest attempt by Dangote Group to build Africa’s largest refinery in Nigeria when investors, both foreign and local, have kept a far distance from investing in the downstream sector, could be light at the end of the tunnel, operators have said.

    The investment, worth $9billion, comprises a 400,000 barrel per day oil refining capacity and a fertiliser plant. The project is being financed by a consortium of local and foreign banks.

    Of interest in the project, is that the refinery is coming against the backdrop of failed efforts by the government to encourage private sector participation in the establishment and management of private refineries.

    For example, in 2002, the government issued 12 operational licences to firms to build private refineries. Since then, not one of them was able to convert or utilise them until they were revoked five years later.

    Many reasons were advanced for the failure. They ranged from poor pricing of petroleum products, lack of interest in bank funds, and increased restiveness in the Niger Delta, the oil rich region, among others.

    Besides the challenges that stalled the take-off of these licensed refineries and other three greenfield ones proposed by the government, the state of the four refineries, in Port Harcourt, Warri and Kaduna, owned by the Nigerian National Petroleum Corporation (NNPC), have not elicited any hope to would-be investors in the sector.

    The immediate past NNPC Group Managing Director, Austin Oniwon, said running private refineries was not feasible.

    Oniwon, who spoke with reporters after he delivered a paper as Guest Speaker at the pre-convocation ceremony of the Ahmadu Bello University (ABU), Zaria, said the cost of running a private refinery is so enormous for a businessman to survive.

    He urged those calling for the establishment of private refineries before the removal of oil subsidy to do a rethink, saying it was only the government that could withstand the financial rigour of the project.

    He said where you control a price of petroleum products to a point that is below the cost of manufacturing, only the government can really invest in such sector because it alone can bear the loss.

    He said: “Anybody you tell to go and pay for crude oil at international price and earn below the international price for the product he is going to bring, will not do it.

    “That is why private refinery licences are stalled. But once we have the courage to deregulate the sector, you will be surprised. The upstream was deregulated. In fact, nobody ever regulated the upstream and you can see how many people are there. The telecoms was deregulated, you see how many people are playing there.”

    Oniwon’s argument for the deregulation of the downstream petroleum sector, may have spured Dangote into this gigantic project.

    One of the major marketers told The Nation that one of two factors must be in place to make the $9 billion Dangote planned refinery to be viable, adding it is either that the government deregulates the sector before the refinery begins operation, or that it would put stringent measures in place to regulate importation of petroleum products.

    He said access to foreign exchange is paramount, in addition to the government giving the company waivers in crude supply.

    The marketer said: “Businessmen are not Father Christmas. They invest to make profits. Maybe Dangote has done all the arithmetic and has been assured by the government that prices will be deregulated before the refinery begins operation. So, he is sure that he will cover all his cost and make reasonable margin.

    “The second factor is that the government might have assured him that he will be given concession for crude supply at prices lower than what obtains at the international market. You know that the government doesn’t give waivers, but in Dangote’s case, it is different. Even if the government deregulates the petroleum marketing sector, it (government) will make it impossible for people to bring products to save the refinery. The government may direct the Central Bank of Nigeria (CBN) not to give forex to importers just to ensure that the investment is protected.

    “In the absence of these factors, I don’t see the viability of the project because there is no way he can sell gasoline (petrol) at N97 per litre and the business surviving.”

    On supply of crude oil to the refinery, NNPC Group Executive Director, Exploration and Production, Abiye Membere, assured that the corporation will give uninterrupted supply of crude to the refinery, barring any acts of vandalism of pipelines that convey the crude there.

    He told The Nation that the steady supply of crude applies to any investor that builds a refinery in the country, but however noted that it may not be possible to sell crude to the refinery at a reduced price.

    He said even the NNPC buys its crude at international price, insisting that the government would sell crude to the refinery at international price.

    However, President Goodluck Jonathan has assured that the Dangote Group will not find the government wanting in this endeavour.

    Jonathan, who spoke while receiving the President of the Dangote Group, Alhaji Aliko Dangote, who led other investors and bankers to the Presidential Villa, Abuja, moments after the $3.3 loan agreement was signed, said his administration was committed to removing major impediments to investments in the country, such as inadequate infrastructure and unsteady power supply.

    “We are pleased that you are now investing in refining, petro-chemicals and fertiliser production. It is the downstream sector of oil and gas that can really create many jobs. Your interest and investment in that area will help in the area of job creation which we have been emphasising. You are also helping us to move away from being a mere producer of raw materials by adding value to our natural resources.” he told Dangote and members of his delegation.

    Dangote has acknowledged government’s support in the phenomenal growth of his Group. He said government’s policies have helped “us greatly.” “Without them, we will not be where we are today. We have taken the challenge and we will replicate the successes recorded in the cement industry through the backward integration in petroleum refining,” adding that the refining, petro-chemicals and fertiliser complex will make Nigeria a net exporter of petroleum products.

     

  • Production from Port Harcourt refinery hits 17m litres daily

    With the maintenance work carried out by the Nigerian National Petroleum Corporation (NNPC) at Port Harcourt Refinery, it now produces 17 million litres of different products per day, it was learnt.

    The new production level was attained as a result of the rehabilitation of the nitrogen plant of the 210, 000 barrels per day refinery, which has been dysfunctional for over a year.

    However, the optimisation of the refinery is being limited by the incidence of vandalism of the pipelines that supply crude and evacuates products from the refinery.

    Spokesman of the company Mr. Ralph Ugwu, had told reporters that the refinery produces about 7.5 million litres of premium motor spirit (petrol), three million litres of dual purpose kerosene (DPK) and 6.5 million litres of automotive gas oil (diesel).

    Ugwu said production from the refinery now contributes to the nation’s petroleum products supply to guarantee availability of fuel Nigerians. The development, he added is part of NNPC’s plan to reduce the volume of imported fuel especially petrol as well as subsidy paid by the government.

    Ugwu noted that the management of Port Harcourt refinery have activated processes to bring the critical units of the plant back into operation adding that the fixing of the Nitrogen plant has also paved way for the maintenance and putting other vital sections of the refinery into operation, including the Catalytic Reforming Unit (CRU) and Naphtha Hydro-treating unit (NHU).

    He said that when the planned turnaround maintenance of the refinery is completed, production would increase by about 30 percent.

    The Group Executive Director, Refineries and Petrochemicals, NNPC, Tony Ogbuigwe, commended the management of the Port Harcourt refinery for the commitment to ensuring increased output from the refinery and assured them of NNPC’s support to sustaining operation of the plant.

    The Managing Director of the refinery, Ian Udoh, said the members of staff of the company are committed noting that the modest success achieved was due to the foundation laid by his predecessor Ogbuigwe. He urged the staff to sustain the tempo despite challenges resulting from crude supply disruptions by oil thieves and vandals.

    On attacks on the pipeline, he said that 199 incidents were recorded product line from the refinery to Okrika Jetty in 2012 alone. He also noted that challenges of pipeline vandalism including pollution of the environment and economic loss.

    He also pointed at other concerns over the pipeline breaks to include environmental pollution and degradation, huge economic loss and possible fire outbreak in contiguous local communities.

    In view of the above challenges, Ugwu said the company has embarked on massive enlightenment campaigns in its various host communities stressing the dangers and effects of pipeline vandalism and product adulteration to health, safety, environment, machinery and the economy.

    “The management of PHRC passionately appeal to opinion leaders and government agencies to come to its aid in curbing the activities of vandals through the enlightenment of the citizens to enable the company deliver on its mandate of ensuring optimal and sustainable production of refined petroleum products for the benefit of all Nigerians,” Ugwu said.

  • Firm to build 107,000 bpd refinery in Bayelsa

    Firm to build 107,000 bpd refinery in Bayelsa

    An indigenous company, EPIC Refinery and Petrochemical Industries Limited, said it had concluded arrangement to build a 107,000 barrel per day refinery in Bayelsa State, which is expected to be completed in 2014.

    The Managing Director and Chief Executive Officer of the company, Hon. Barango Matthew Wenka Jnr. stated this during a presentation on planned refinery to the Department of Petroleum Resources (DPR) in Lagos.

    “EPIC Refinery and Petrochemical Industry Limited will be commissioned in 2014 by President Goodluck Jonathan if the DPR will issue us the operational license without delay,” Wenka stated after the presentation.

    The refinery, which will be sited in Oporoma Community in Bayelsa State, Wenka said, is purely a private business concern that has everything ready to make the project succeed despite failures of several firms that had been issued licenses to construct in the past.

    The Coordinator of EPIC refinery, Mr. Zakari Umar, an engineer, who also led the EPIC technical team, took the DPR team led by Olumide Adeleke, the Assistant Director, Pipelines, Plants and Installation and Joseph Odiong, Manager, Hydrocarbon Processing Plant, through the plant drawings, process description and flow schematics of the refinery.

    Presenting the technical details of the refinery and petrochemical plant, Umar said the construction of the refinery would be done in close collaboration with the DPR. Umar explained the design philosophy, technology, design development and components of the refinery complex as well as the construction, stock input and output (the yield), export options and modalities, power generation and social infrastructure of the refinery.

    Umar stated that what informed the choice of Oporoma as the site for the refinery is nearness to source of crude oil. He said the refinery complex, will be configured to process 107,000 barrels of crude oil per day (Bonny Light or low sulphur blends). He listed the process units of the refinery to include crude distillation, naphtha reformers, vacuum distillation and gasoil hydro-cracking units. Others include hydro-treating units for kerosene and diesel, residual fluid catalytic cracking and merox unit.

    He explained that out of the 107,000 barrels of crude feed per day, 4,287 barrels of fuel gas and 25,320 barrels of gasoline (petrol) will be produced. For kerosene, diesel and fuel oil, he said, 10,332 barrels, 38,714 barrels and 25,897 barrels of the products will be produced on daily basis.

    On the proposed market for the products, Umar said Nigeria and other West African countries as well as the United States and Europe would be the primary markets. He also told the DPR that the company would also build a power plant that would generate over 200 megawatts (MW) of electricity to power the refinery, adding that the excess of what would be required by the refinery would be wheeled into the national grid at a reasonable price.

    Adeleke promised the EPIC team of DPR’s support but stated that in time past, other promoters had come for presentations after which nothing happened. Reacting to the statement, the EPIC chief reassured DPR that the funds for the project is not a problem as HSBC had already pooled together about $30 billion required for it. All the bank is waiting for is the approval from DPR for it to start. He said the refinery, when completed would represent a monumental legacy in the transformation agenda of the administration of President Jonathan.

    Stressing the need for the construction of the refinery, Wenka said the downstream subsector of Nigeria’s oil and gas industry is under-invested. The sector he said, lacks adequate productive capacity, which accounts for the reason refined products are largely imported. The opportunities of profit and technology transfer are being lost to other developing countries, making petroleum products to be perennially in short supply with demand always high.

    In view of these, refining of crude oil is attractive to local and foreign investors and above all, government needs to extricate itself from the stronghold of products importation and subsidy scandal.

    He said EPIC is ready to commence work if the DPR issues it the license, adding that the company’s technical partner, the Sino Asian Energy (SAE) Group Limited has cutting edge technology and vast experience in the construction of refineries worldwide. The EPIC boss cited other projects undertaken by SAE Group to include the ultra-modern 348,000 barrel per day capacity refinery recently completed in Indonesia.

    He said that EPIC and SAE Group are in a joint venture. The SAE Group is to Build, Operate and Transfer (BOT) the refinery to EPIC by 2016. According to the BOT schedule, the construction is to take 24 months while the operate period is to last for 48 months. The pre-start activities of site acquisition, surveys, assessment, compensation, clearing, fencing and similar issues had been sorted out already, he added.

    He also told the DPR that a memorandum of understanding (MoU) has been signed with the Federal Ministry of Trade and Investment, which has promised to fast-track the processes and incentives. The project will cost about $30 billion and would be fully funded by foreign financiers. He noted that there is a proof of funds made available by HSBC.