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Kachikwu: Lack of Access to Finance Hampering Construction of 33 Private Refineries



modular refineries
  • Kachikwu: Lack of Access to Finance Hampering Construction of 33 Private Refineries

The difficulties faced by private investors in accessing finance to complete detailed engineering analysis and commence construction work after obtaining the approval to construct (ATC) is the major challenge that hampers the execution of majority of the 33 private refineries licenced by the federal government.

Investigation revealed that while some of the refineries are still at the detailed engineering design stage, others have been given approval to construct (ATC) by the Department of Petroleum Resources (DPR) but could not proceed with the projects as a result of paucity of funds.

This is coming as the United States Government, through the US Trade and Development Agency (USTDA), has provided a take-off grant for the Eko Petrochem and Refining Company Limited, a private Nigerian refinery and petrochemical company being promoted by Integrated Oil and Gas Company Limited at the Tomaro Industrial Park Free Trade Zone in Amuwo Odofin Local Government Area of Lagos State.

There are three levels of approval for setting up private greenfield or modular refineries in Nigeria – License to Establish (LTE), Approval to Construct (ATC), and Licence to Operate (LTO).

Of all the 33 private refineries that were given Licence to Establish (LTE), only the 1,000 barrels per day refinery operated by the Niger Delta Petroleum Resources in Ogbelle in Rivers State has come on stream.

The refinery currently processes crude oil from the flow station operated by the Niger Delta Exploration and Production (NDEP) Company into diesel.

Most of the other investors have not kicked off the construction works as a result of difficulties in accessing funding.

But the United States Government at the weekend came to the rescue of the Eko Petrochem and Refining Company Limited located in the newly created Tomaro Island Free Trade Zone of Lagos, as USTDA has offered a grant to finance the completion of the detailed analysis of supporting technologies and engineering for the implementation of the 20,000 barrels per day refinery.

Speaking on the island at the weekend, the US Ambassador to Nigeria, Mr. Stuart Symington, urged Nigerians to invest in Nigeria so as to have the right to complain when things are not going right.

Symington also noted that the administration of President Muhammadu Buhari believes in private sector investments.

“He (Captain Emmanuel Ihenacho) is investing at the time with a government that believes profoundly in the power of individual citizen and entrepreneur. He is doing it at a time with government that believes that Nigeria can do what can be done anywhere in the world,” Symington said.

In his remarks, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, who identified lack of access to funding as the major challenge of the 33 licensed refineries, added that the seed money provided by USTDA for the Eko Refinery is an indication that the refinery has a potential partner that could finance the project.

Kachikwu, who was represented by his Senior Technical Adviser, Mr. Rabiu Suleiman, also stated that the USTDA gesture has demonstrated the seriousness of the Chairman of Integrated Oil and Gas Limited, Captain Emmanuel Ihenacho in implementing the refinery project.

“I remember when we summoned all those licensed to build private refineries – about 33 of them today, to meet with the minister; the chairman of this organisation (refinery) was very conspicuous and very visible, especially when the threat of cancellation of licenses was mentioned. You can see the passion; you can see the commitment; you can see the determination to make this project a reality. And his voice was very loud, saying ‘please, don’t attempt to do that,’ promising that the challenges can easily be overcome,” Kachikwu said.

“Most of those who have been licenced to establish refineries in Nigeria have two major challenges. One is financing. We all know that it is very difficult to raise funding and therefore, when you hear that the USTDA is extending its hands of fellowship and support in providing initial seed money required to go beyond the detailed engineering design, that also shows that behind him – the visionary of this project, there is a potential partner that is likely to support and to provide the required finances to establish this particular project. And for him to be able to bring down to this island, a representative of the US – our own US President, that is, the Ambassador himself, to this island, is another demonstration of commitment and determination to do what is ever is necessary to see that this project takes place,” Kachikwu added.

He promised to do whatever he can to support the project to meet his expectations and save his job, having made a commitment to resign if Nigeria does not become self-sufficient in petroleum products by 2019.

In his speech, the Chairman of Integrated Oil and Gas Limited, Ihenacho, who is also the Chairman of the refinery, noted that the US Government, acting through the USTDA, has accelerated the process of the planned development of the refinery.

According to him, the “grant is to specifically use to finance the completion of the detailed analysis of supporting technologies and engineering for the implementation of the 20,000 barrels per day crude oil refinery.”

Ihenacho added that by delivering the over $797,343.00 grant, USTDA has demonstrated its commitment to infrastructure development and economic growth of Nigeria, especially in the areas of export technologies and services that promote the country’s refining capacity.

In his speech, the Acting Director of USTDA, Mr. Thomas Hardy, said the refinery project would provide an excellent opportunity for US businesses to export technologies and services to boost Nigeria’s refining capacity.

“We are proud to support this new project, which will lead to infrastructure development and economic growth in Nigeria,” Hardy said.

Also speaking at the grant-signing ceremony, the Project Director of Eko Petrochem and Refining Company Limited, Mr. Gordon Paton, stated that his 25 years of experience working in Africa, primarily in oil field construction, has equipped him for the assignment.

The Managing Director of Nigeria Export Processing Zones Authority (NEPZA), Hon. Emmanuel Jime, who declared Tomaro Island a FTZ at the ceremony based on the approval of President Muhammadu Buhari, said the move was to make Nigeria an attractive destination for investments.

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

Crude Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend




Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

Oil retreated from an earlier rally with investment banks and traders predicting the market can go significantly higher in the months to come.

Futures in New York pared much of an earlier increase to $63 a barrel as the dollar climbed and equities slipped. Bank of America said prices could reach $70 at some point this year, while Socar Trading SA sees global benchmark Brent hitting $80 a barrel before the end of the year as the glut of inventories built up during the Covid-19 pandemic is drained by the summer.

The loss of oil output after the big freeze in the U.S. should help the market firm as much of the world emerges from lockdowns, according to Trafigura Group. Inventory data due later Tuesday from the American Petroleum Institute and more from the Energy Department on Wednesday will shed more light on how the Texas freeze disrupted U.S. oil supply last week.

Oil has surged this year after Saudi Arabia pledged to unilaterally cut 1 million barrels a day in February and March, with Goldman Sachs Group Inc. predicting the rally will accelerate as demand outpaces global supply. Russia and Riyadh, however, will next week once again head into an OPEC+ meeting with differing opinions about adding more crude to the market.

“The freeze in the U.S. has proved supportive as production was cut,” said Hans van Cleef, senior energy economist at ABN Amro. “We still expect that Russia will push for a significant rise in production,” which could soon weigh on prices, he said.


  • West Texas Intermediate for April fell 27 cents to $61.43 a barrel at 9:20 a.m. New York time
  • Brent for April settlement fell 8 cents to $65.16

Brent’s prompt timespread firmed in a bullish backwardation structure to the widest in more than a year. The gap rose above $1 a barrel on Tuesday before easing to 87 cents. That compares with 25 cents at the start of the month.

JPMorgan Chase & Co. and oil trader Vitol Group shot down talk of a new oil supercycle, though they said a lack of supply response will keep prices for crude prices firm in the short term.

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Crude Oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return



Crude oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

Oil prices rose on Monday as the slow return of U.S. crude output cut by frigid conditions served as a reminder of the tight supply situation, just as demand recovers from the depths of the COVID-19 pandemic.

Brent crude was up $1.38, or 2.2%, at $64.29 per barrel. West Texas Intermediate gained $1.38, or 2.33%, to trade at $60.62 per barrel.

Abnormally cold weather in Texas and the Plains states forced the shutdown of up to 4 million barrels per day (bpd) of crude production along with 21 billion cubic feet of natural gas output, analysts estimated.

Shale oil producers in the region could take at least two weeks to restart the more than 2 million barrels per day (bpd) of crude output affected, sources said, as frozen pipes and power supply interruptions slow their recovery.

“With three-quarters of fracking crews standing down, the likelihood of a fast resumption is low,” ANZ Research said in a note.

For the first time since November, U.S. drilling companies cut the number of oil rigs operating due to the cold and snow enveloping Texas, New Mexico and other energy-producing centres.

OPEC+ oil producers are set to meet on March 4, with sources saying the group is likely to ease curbs on supply after April given a recovery in prices, although any increase in output will likely be modest given lingering uncertainty over the pandemic.

“Saudi Arabia is eager to pursue yet higher prices in order to cover its social break-even expenses at around $80 a barrel while Russia is strongly focused on unwinding current cuts and getting back to normal production,” said SEB chief commodity analyst Bjarne Schieldrop.

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Crude Oil

Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather




Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

Oil prices rose to $65.47 per barrel on Thursday as crude oil production dropped in the US due to frigid Texas weather.

The unusual weather has left millions in the dark and forced oil producers to shut down production. According to reports, at least the winter blast has claimed 24 lives.

Brent crude oil gained $2 to $65.47 on Thursday morning before pulling back to $64.62 per barrel around 11:00 am Nigerian time.

U.S. West Texas Intermediate (WTI) crude rose 2.3 percent to settle at $61.74 per barrel.

“This has just sent us to the next level,” said Bob Yawger, director of energy futures at Mizuho in New York. “Crude oil WTI will probably max out somewhere pretty close to $65.65, refinery utilization rate will probably slide to somewhere around 76%,” Yawger said.

However, the report that Saudi Arabia plans to increase production in the coming months weighed on crude oil as it can be seen in the chart below.

Prince Abdulaziz bin Salman, Saudi Arabian Energy Minister, warned that it was too early to declare victory against the COVID-19 virus and that oil producers must remain “extremely cautious”.

“We are in a much better place than we were a year ago, but I must warn, once again, against complacency. The uncertainty is very high, and we have to be extremely cautious,” he told an energy industry event.

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