The deplorable state of the three Nigerian refineries and the growing demand for petroleum products have forced the country into becoming a major importer of petroleum products despite being an oil producer. ABDULRAHEEM AODU & USMAN IBN A. LAPAI write on the challenges facing new refineries asdaunting, even as the old ones are being refurbished to increase their capacities
Crude oil production
Nigeria would continue to import refined petroleum products such as petrol, diesel and kerosene to augment what the three refineries in the country are producing until the country is able to shore up its production capacity to about 30 million litres of petrol per day, which is the country’s current demand.
Currently the three refineries in Kaduna, Warri and Port Harcourt with combined production capacity of 445, 000 barrel per stream day (bpsd) crude oil at full strength. Kaduna refinery was built in 1980 (fuel plant) with capacity for 50, 000 bpsd and expanded in 1986 to 60, 000 bpsd, while its lube plant was built in 1983 with 50, 000 bpsd capacity, making a total of 110, 000 bpsd capacity.
The Warri refinery was built in 1978 with 100, 000 bpsd capacity, while it was expanded to 125, 000 bpsd in 1987, just as the first Port Harcourt refinery was built in 1965 with capacity of 60, 000 bpsd. The second Port Harcourt refinery was built in 1989 with 150, 000 bpsd capacity.
The three refineries in full production churn out 17 million litres of premium motor spirit (PMS) per day. However, decades of wear and tear has had its toll, as they currently produce about 8.5 million of PMS per day, which is about 50% of their installed capacity.
This is why the refineries needed to be refurbished in situ to increase their capacity production to maximum without shutting down their operations. The refurbishment will also enable them increase local contents in their machineries as new locally made parts, where available, are used to replace old and faulty ones, with the input of local engineers.
Need for new refineries
According to the managing director of Kaduna Refining and Petrochemical Company, Engr. Saidu Mohammed, Nigeria will continue to import fuel until new refineries are built because the four existing refineries even at full capacity cannot produce the 30million litres per day PMS required to fuel Nigerian cars, plants and machineries.
Engineer Saidu told a workshop held in Kano by KRPC for energy correspondents, with the theme ‘Managing Information in the Oil and Gas Industry’, that the ongoing rehabilitation at the Kaduna refinery will increase its production to 80% by the end of 2014 and 90 to 100% by the turn of 2015.
“We are rehabilitating the refinery in situ as part of the maintenance programme. The cost of rehabilitation is part of our operating cost. We would continue to import petroleum products as long as we don’t produce enough.
“Government is looking for new refineries even as Dangote is also venturing into building refinery because at 100% production, the three refineries cannot meet Nigeria’s demand of 30 million litres of PMS per day even with our borders being crossed with some of the fuel.”
For KRPC executive director services, Malam Idi Mukhtar, Nigeria needs five additional medium refineries to produce enough petroleum products that would satisfy the domestic market need. He added that the refinery recently built by Niger Republic with 20, 000 barrel per stream day capacity is just about a unit of KRPC.
“The structure is not there to satisfy national demand; the three refineries cannot meet national demand. Nigeria can take five more refineries of 500, 000 barrel per day capacity with each of them satisfying the domestic market.
“If all refineries are producing at 100%, they can hardly give more than 17 million litres per day of PMS which leaves a shortage of 13 million litres per day of PMS. This is why government import petroleum products to cover for the shortage.
“The Nigerian refineries are all aged thus cannot produce at 100% capacity which is why the federal government makes commitment to refurbish them without shutting down their operations to enable them shore up their production beyond current 8.5 million litres per day of PMS.
“Kaduna Refinery produces 2.5 million litres of PMS daily that is78 trucks, for the northern parts of the country, so you can imagine what would happen if we have to shut down for 45 days because of rehabilitating the refinery.”
The new refinery challenge
The $139 million Dangote refinery and petrochemical company to be built in Lekki, Lagos state by the Dangote Oil Refining Company of Nigeria is expected to significantly reduce the shortfall and reduce Nigeria’s dependence on imported fuel by 2015 when it is expected to commence production.
The project that is planned to be located in the Lekki Free Trade Zone, involves the construction of a 600,000 tonnes per year polypropylene plant and a petroleum refinery with a capacity of 400,000 barrels per stream day.
The refinery will also incorporate crude and product handling facilities through a single point mooring, a crude distillation unit, a residue fluid catalytic cracking unit, a diesel hydro-treating unit, a continuous catalyst regeneration unit, an alkylation unit and a polypropylene unit.
The Nigerian petroleum products requirement that stands at 30 million litres of petrol per day today is expected to have increase geometrically by 2015, which means that the Dangote refinery even at full production capacity may not end importation of petrol by 2015.
The above revelation therefore means that there is need for more refineries in the country. Many prospectors that were granted oil refinery license several years ago are yet to take any major step towards building such a facility. Dangote had to source for loan from consortium of banks to commence the project.
Unfortunately, most of the oil prospectors have no desire to build a refinery but wanted to be granted the license to lift crude oil and sell abroad for their own pecuniary gains and at huge loss to the country.
Nigeria has faced and is still facing problems on the issue of fuel importation since the days of General Sani Abacha as the head of state when the fuel with pungent odour imported by government is alleged to have killed several people because of its pungent and poisonous fumes.
Also in early 2012, Nigeria was at standstill as government and workers had a critical face off over the removal of petroleum subsidy, the process that gave birth to the current Subsidy Removal Programme (SURE-P) and saw petrol price increased from N65 to the current price of N97.
Dissatisfied, government is still threatening to remove the remaining subsidy to allow full deregulation of the petroleum industry especially the downstream sector, with the attendant effect on Nigerians.
Though the removal of oil subsidy would help kick the thieves siphoning Nigerian oil money through importation of petroleum products out of business, what guarantee are there to show that another cabal would not take over another part of the Nigerian oil business to further fleece the country.
