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Expiring Licences Threaten Bid for Nation’s Local Refining

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  • Expiring Licences Threaten Bid for Nation’s Local Refining

Thirty-two companies granted licences to establish (LTE) and approval to construct (APC) private refineries with a combined capacity of 1.352 million barrels per stream day (mbpsd) in the country may lose their permits as their June 2018 deadline approaches.

Statistics obtained show that the medium- to long-term (18 months to three years and above) permits, granted by the oil and gas industry regulator, Department of Petroleum Resources (DPR), are nearing their terms.

If the licences expire without the coming on stream of the facilities, the country’s quest to attain self-sufficiency in refining petroleum products could be frustrated. The Federal Government hopes to buoy the nation’s refining capacity through these private refineries, as the existing ones remain largely under-utilised, with an average monthly capacity put at 28.10 per cent as at February end, according to official data.

The coming on stream of these facilities is geared at drastically reducing the huge capital flight to fuel importation, while also meeting local demand and possible exports.

The nation’s existing refineries – Port Harcourt 1 and 2, Warri and Kaduna, all operated by the Nigerian National Petroleum Corporation (NNPC) and Niger Delta Petroleum Resources Limited have a combined capacity of 446,000bpd – but grossly inadequate to meet national daily demand.

Of the 32 licences issued between December 2007 and June 2016, only five have progressed to the APC stage. The other 27 are at the LTEs level while 23 others are yet to commence work.

Amakpe International Refinery, with the oldest revalidated licence (ATC December 2007), is among the old batch of licensees that got stuck due to funding challenges.

If the licences expire, history might well be repeating itself as it was in 2002 when DPR granted 21 LTE permits with an 18-month tenor to private companies which never yielded result largely due to financial and feedstock (crude supply) issues.

The LTE is the first stage of the permit, which progresses to APC after satisfying all the terms. “Under the terms, the LTE and APC are valid for a period of 24 months, but are subject to renewal based on the level of work done,” according to the DPR.

The regulator admitted that the licensees were mostly challenged by funding given the precarious foreign exchange situation in the country. But it insisted that there would be no feedstock guarantee for any investor.

The agency went on: “The refineries will source for their own crude. They can buy from the international oil companies (IOCs) or marginal fields operators (MFOs) at prevailing international market prices.”

The investigation revealed that some of the investors would not rely only on domestic crude as they might import oil from Angola, Gabon, Liberia, Middle East and some South American nations.

For instance, investors in the Dangote Oil Refinery Company, whose LTE was granted in September 2014 with actual capacity template of 500,000bpd, have promised to deliver the project in the last quarter of 2019.

Though the licence expires this September, work has progressed to the Front End Engineering Design (FEED), indicating that it might be renewed for an onward progression to the APC.

The Group Executive Director of Dangote Industries Limited, Devakumar Edwin, who is overseeing the construction, said that operations would commence on the promised date.

He disclosed that the facility, often quoted to have 650,000 bpd capacity, expects no problem with feedstock, as it would source content from crude terminals instead of specific oil fields.

Edwin continued: “So the location of oil wells and their reducibility have no relevance to crude supply to the refinery.

“Dangote Oil Refinery is designed to use various grades/blends of crude just as a means of ensuring flexibility should Nigerian crude be disrupted. However, normally there should be sufficient Nigerian crude to meet the refinery’s needs.”

In a copy of the Final Environmental and Social Impact Assessment report, the company said the proximity of the Lagos Free Zone (LFZ) to new oil and gas deposits was instrumental to its siting.

The company, according to the document submitted to the Federal Ministry of Environment, further confirmed the sources of its crude.

“This crude oil shall be transported to the refinery by marine tankers. Berths for these crude oil marine tankers shall be situated along the refinery’s terminal, which shall be located on the coast of the Atlantic Ocean. At the marine terminal, the cargo of crude oil is discharged through pipelines to storage tanks in the refinery,” it added.

Expressing concerns over crude supply to the private refineries, the Head, Energy Research, Ecobank Plc, Dolapo Oni, noted: “The refineries must be adequately supplied with crude oil. This is another challenge I think the Dangote Refinery would face except it sources its own crude from abroad, without relying on Nigerian crude.”

Oni also decried the under-utilisation of the existing refineries, which he described, as so badly managed and operating at below 50 per cent capacity for many years.

The Deputy Director, Emerald Energy Institute, University of Port Harcourt, Prof. Chijioke Nwaozuzu, suspects that based on its location, the project was positioned more for export. “The location of the refinery is close to the Atlantic Ocean, which would suggest that as part of contingency plans, they intend to use the ocean for crude oil deliveries as well as refined products export.”

To avoid a repeat of the past ugly incident, Nwaozuzu urged government to divest some of its equities in the IOCs JVs for the private refineries.

“An ingenious way by which government could provide Dangote Refinery and others with crude feedstock would be to sell some of the JVs percentage holding with the IOCs.

“Since government owned 55 to 60 per cent interests in the JVs, it could offload up to 15 to 20 per cent to the private refineries.”

This, he noted, would ensure the security of supplies of feedstock to the refineries. “Government will also generate significant revenues, which, if spent wisely, could enable Nigeria to come out of economic recession and stagflation,” he added.

But the Chief Operating Officer, Gas and Power, NNPC, Saidu Mohammed, saw no big deal in feedstock guarantees. He cited several countries that are big refiners of petroleum products but do not produce crude oil.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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MTN Nigeria, Gameloft Partner to Increase Access to Variety of Exciting Games

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MTN Nigeria announced it has partnered with Gameloft, a leader in the development and publishing of games, to increase access to a variety of fun and exciting games online.

The telecommunications giant in collaboration with its new partner, Gameloft announced the launch of MTN Gameworld, a new gaming platform for its subscribers.

According to MTN, the new platform will allow the Nigerian growing gaming community access to a lot of unique games online through an extensive premium catalogue from Gameloft and other renowned publishers.

Commenting on the partnership, Srinivas Rao, the Chief Digital Officer, MTN Nigeria, said, “We are constantly seeking to deliver innovative products that support the aspirations of our customers, whilst delivering superior user experience. This partnership allows us to provide our customers with access to a variety of exhilarating games from Gameloft and other leading publishers at an affordable rate.”

MTN Gameworld will allow subscribed customers access to a variety of games, which they can play at subsidised data rates through the MTN Gameworld app. Android, iOS and Windows phone users can subscribe via SMS, app, web, USSD menu (*447#), 131 USSD menu and any other MTN customer channel.

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President Buhari Commissions 5,000bpd Modular Refinery Built in Imo State

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President Muhammadu Buhari on Tuesday commissioned the 5,000 barrels per day modular refinery built by Waltersmith Group in Imo State.

President Buhari, who commissioned the new modular refinery virtually, said the refinery will enable Nigeria to export petroleum products to neighbouring countries and other markets.

The 5,000 barrels per day Waltersmith Modular Refinery is the first phase of 50,000 barrels per day combined capacity plant planned for Imo State, according to the Group.

Buhari commended Waltersmith Group, an indigenous oil firm, and the Nigerian Content Development and Monitoring Board for the collaboration that led to the actualisation of the modular refinery.

President Buhari, therefore, directed the Ministry of Petroleum Resources, the Nigerian National Petroleum Corporation, the Department of Petroleum Resources and all other relevant government agencies to provide Waltersmith all the necessary support in terms of access to crude oil and condensate feedstock.

Buhari said, “We rolled out our refining roadmap in 2018, to address challenges in the downstream sector. After many years of government giving out modular refining licences without any coming on-stream, we are today seeing a commissioning within two years.

“The plan to commence the expansion of this refinery to 50,000bpd capacity, to refine crude oil and condensate, is a demonstration of the economic reform Nigeria is undergoing.

“The realisation of the refinery roadmap will ultimately lead us to becoming a net exporter of petroleum products, not only to our neighbouring countries but to other wide markets,” he said.

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Elon Musk Net Worth Jumps by $100 Billion this Year to Topple Bill Gates, Mark Zuckerberg, Others 

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Elon Musk, the Chief Executive Officer and founder of Tesla, is now the world’s second-richest person following another surge in the price of Tesla share.

Musk total net worth jumped by $7.6 billion to $110 billion between November 16 and 17 to dethrone Facebook founder, Mark Zuckerberg, from the third position.

Since then, Tesla stock has been on a bullish run and in the last 24 hours added $7.24 billion to Elon Musk’s total net worth, according to Bloomberg Billionaire Index. Bringing the billionaire’s total net worth to $128 billion.

Elon Musk’s net worth rose from just $28 billion in January 2020 to $128 billion on November 24, 2020, representing an increase of $100 billion, the highest by any billionaire.

Musk has finally toppled Bill Gates as the second richest person and for the first time, Bill Gates is the third richest man in the world. This is the first time in almost 40 years that Gates will be in the third position.

Billionaires listed on Bloomberg Index have collectively gained $1.3 trillion this year.

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