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Oil Field Owners Urged to Lead Modular Refinery Construction

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  • Oil Field Owners Urged to Lead Modular Refinery Construction

To address the challenges facing modular refinery construction in Nigeria, industry stakeholders have urged indigenous exploration and production companies, which own producing oil fields, to drive the initiative.

Head, Energy Research Desk, Ecobank Plc, Mr. Dolapo Oni, said companies such as Seplat, Shoreline and Neconde should be leading modular refinery development. He noted that any investor, who wants to do modular refinery that would produce different forms of fuel, including aviation kerosene for the purpose of selling locally and for export, will face a big challenge if he is not a crude oil producer.

He said: “If you look at refineries that have been developed in Nigeria that are successful, it is only one – Niger Delta Petroleum Resources Limited (NDPR). They own the field and built their refinery on their field, process their own crude and produce diesel at the rate they sell,” adding that it is the only model that can work for us here.

Oni stressed the need to build refineries that can process crude from anywhere and any type of crude. He said: “You don’t just build refineries that can only process the Nigerian crude,” adding that: “If you are not able to get constant supply of crude, that becomes a challenge to the refinery.”

To him, one of the challenges facing the development of modular refineries in the country is sourcing for funds outside the country. He said Nigerian banks do not have much funds, and are already pressured by existing facilities to the oil and gas sector and cannot expand more.

According to him, only a few of the top banks can provide some lending to the oil and gas sector, and refinery funding will be a challenge locally.

“What it means in getting foreign funding is that you have to look at countries where refineries are gradually declining and they are looking to shift all that investments to somewhere else, countries like France and Italy.

“Also, you look at countries that can provide export credit. For example, you can buy from the United States and they will be able to fund it, so with that you can actually bring it and refine it in Nigeria and, over time, you can pay them back.

“But again, all these things, to some extent, require government’s guarantee as well. Government’s guarantee of crude feedstock was not for free because what some of them are asking is that they want government to guarantee them free crude not that they will not pay, but they will pay after the sale,” he said, adding that it can not work now.

“Government should be able to guarantee that we get the crude to your refinery, but you must pay for the crude when it comes to you,” he insisted.

He continued:“It will be a very big challenge because it means that products from the refineries have to be sold in dollars to foreign countries because you will pay back your funders in dollars.”

Oni said banks were always looking for money to support the industry, adding that they would want to lend if they have the money and as long as the risks could be mitigated. According to him, banks are constantly talking with some foreign banks to complement the opportunity for lending, and more importantly, with participants in the industry.

Ecobank, he said, had championed most of the modular refinery projects that had come up recently, adding it is talking to some of the foreign banks on how to raise money to assist them. “We look for possibilities of putting some money in them in terms of lending. We are trying our best and the best we can do is to talk to other foreign banks to see where we can get money for them,” he added.

On revoking the licences of non-performing modular refineries, the Chairman, Integrated Oil and Gas Limited, Capt. Emmanuel Ihenacho, said the Federal Government should jettison the idea and focus on how to revitalise those refineries for optimum performance.

He said the Department of Petroleum Resources (DPR) should be more concerned with how the operators start refining crude oil in the country and not clamping on them. DPR regulates the activities of the oil and gas industry.

According to him, the DPR was stating the obvious when it said only two out of the 48 modular refinery licensees were working, urging the DPR to temper justice with mercy over licensees whose refineries are yet to begin production.

Speaking at a stakeholders’ forum in Lagos, he said the issue of optimising crude oil processing is what the country needs now and not looking for scapegoats. Many firms have not been able to use their licences due to their inability to get funding from banks and other sources.

Iheanacho said: “It is not that many operators do not want to process crude oil, but they do not have the means to do it. The funds are not just there. The local banks are not ready to provide them facility. When an operator goes to the bank, the banks give excuses. Owning and operating a modular refinery can cost even up to $2billion excluding getting a land for the project and carrying out due process on the project. At a point, the loan seekers would get frustrated by the antics of the banks, and before you know it, the licensee would abandon the idea of operating the refinery.”

He said a modular refinery can be upgraded to suit the needs and the yearnings of its customers, adding that the refinery’s capacity can be upgraded to deliver 20,000 or 50,000 or even 100,000 barrels per day.

Iheanacho said modular refineries have unique features as evident by the ways and manners their sizes and capacities are configured to meet the needs of their operators at any given time.

DPR’s Deputy Director, Mr. Olumide Adeleke, said the government has given operators enough time to plan for the project, stressing that it is in the tradition of the agency to handle issues pertaining to the industry well. He said the government would not hesitate to carry out its oversight functions in the area of maintaining and promoting standards in the sector.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Investment

Saudi Arabia Aims for $80 Billion Tourism Investment to Fuel Vision 2030 Goals

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Saudi Arabia is embarking on a bold venture to attract up to $80 billion in private investment into its burgeoning tourism industry, a move pivotal to realizing its ambitious Vision 2030 objectives.

Tourism Minister Ahmed Al Khateeb unveiled the kingdom’s aspiration during an interview in Riyadh, emphasizing the imperative role of the private sector in spearheading investment endeavors.

With plans to disburse approximately $800 billion on tourism over the next decade, Saudi Arabia is steadfast in its pursuit to diversify its economy and reduce dependency on oil revenues.

Vision 2030 outlines a trajectory for the kingdom to metamorphose into one of the world’s premier tourist destinations, targeting 150 million annual visitors by 2030, a significant portion originating from overseas.

While the government and sovereign wealth fund have historically fueled tourism development, securing substantial foreign direct investment, particularly from the private sector, emerges as paramount in expediting Vision 2030 initiatives.

The kingdom’s fiscal projections, forecasting deficits until 2026, underscore the urgency of engaging private investors to actualize the ambitious tourism blueprint.

Saudi Arabia, having welcomed 100 million tourists in 2023, predominantly domestic travelers, eyes international markets such as India, China, the UK, France, and Germany for tourist influx.

A new program launched by the Ministry of Tourism aims to streamline investment processes, potentially unlocking $11 billion in private investment, bolstering Saudi Arabia’s tourism trajectory and reshaping its economic landscape.

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CBN Unveils Plan to Settle N1.64 Trillion Treasury Bills in Q2 2024

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The Central Bank of Nigeria (CBN) has announced its strategic approach to managing liquidity and meeting financial obligations by unveiling a comprehensive plan to settle Treasury Bills (TBs) worth N1.64 trillion during the second quarter of 2024.

This initiative, part of the CBN’s Nigeria Treasury Bills Issue programme, aims to regulate the money supply within the economy while effectively managing liquidity dynamics.

According to documents obtained by Investors King, the TBs settlement program is slated to commence on March 7th and conclude on May 23rd, 2024.

The CBN will focus on settling TBs with varying tenors, including N414.29 billion on 91 days, N43.74 billion on 182 days, and a substantial N1.18 trillion on 364 days.

The breakdown of the settlement plan reveals monthly settlements to address maturing TBs. In March, the CBN plans to settle N660.62 billion worth of TBs, followed by N292.17 billion in April and N688.3 billion in May.

Market analysts interpret this move as a testament to the CBN’s commitment to managing financial obligations and maintaining economic stability.

It provides investors with opportunities to engage in short-term financial instruments while contributing to overall liquidity dynamics.

The strategic settlement plan reflects the CBN’s proactive stance in navigating economic challenges and ensuring stability within the financial landscape.

As the apex bank implements these measures, stakeholders will closely monitor their impact on market dynamics and economic indicators, anticipating implications for investment decisions and monetary policy outlooks.

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China’s State-Owned Lenders Allocate $8 Billion to Revitalize Property Market

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China’s state-owned lenders have committed a substantial $8 billion in loans to rejuvenate the country’s beleaguered property market, aligning with Beijing’s directives to bolster the sector.

Agricultural Bank of China Ltd. disclosed approving over 40 billion yuan of loans for real estate projects on predefined white lists, signaling a proactive approach towards supporting the housing market’s recovery.

China Construction Bank Corp. also joined the effort, extending 3 billion yuan to five property projects, with plans to greenlight over 20 billion yuan in loans soon.

Industrial & Commercial Bank of China Ltd. and Bank of China Ltd. are among the institutions offering financing assistance, although the exact loan amounts remain undisclosed.

This initiative follows Beijing’s recent call for local authorities to enhance financing support for developers and curate lists of eligible projects.

In response, the big four state lenders pledged to meet reasonable financing demands from developers and projects identified under the coordination mechanism.

However, China’s property market faces challenges despite these measures. New home sales plummeted 34.2% year-on-year, underscoring the ongoing slowdown.

While existing home transactions surged during the Spring Festival holiday, new home sales remained subdued, prompting a cautious outlook among buyers.

The infusion of $8 billion aims to instill confidence and stimulate activity in the property sector, potentially heralding a gradual recovery amid persisting market uncertainties.

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