FG Wants Operators to Refine 20% of Oil Locally

• FG Wants Operators to Refine 20% of Oil Locally

The Minister of State for Petroleum Resources, Dr Ibe Kachikwu, has said the Federal Government will soon announce a policy that will require operating companies to refine locally at least 20 per cent of the crude oil they produce in the country.

Kachikwu said the percentage would increase to 50 per cent in the next five years, adding, “We have no option or we will consistently stay in the abyss of lack of processing, while we export all the raw materials.”

He was quoted in a statement by the Nigerian Content Development and Monitoring Board as saying on Thursday at the ground-breaking of a modular refinery being developed by Waltersmith Refining and Petrochemical Company in Imo State.

The project, with a capacity of 5,000 barrels of crude oil per day, is being executed with 30 per cent equity financing by the NCDMB and an additional $35m debt facility from the African Finance Corporation.

The refinery is expected to commence production in December 2020, according to the statement.

The minister described the Federal Government’s policy on modular refineries as an integral part of the 14-point agenda for reducing militancy in the Niger Delta region.

The plan, according to him, is to set up modular refineries in oil-producing communities and use them to create jobs and absorb the militants.

“We will take some of the good skills sets they have, polish them and put them into the system,” Kachikwu added.

He said 10 of the 38 licensed modular refineries had made appreciable progress in the development of their projects, adding that the first one was expected to start delivering products between December 2018 and January 2019.

“From the modular refineries, we will be able to process about 200,000 barrels of crude and put them into the system,” the minister stated.

He said the Federal Government was engendering the establishment of modular refineries through the financing model being managed by the NCDMB and had also granted free customs duty charges and other waivers to enable the investors to bring in their equipment.

Kachikwu stated that the government remained committed to completing the revamp of the nation’s four refineries located in Port Harcourt, Warri and Kaduna by 2019, with a target of processing about 500,000 barrels of crude oil daily.

He regretted that continued importation of refined petroleum products was costing the nation huge sums of money, describing it as a waste of foreign exchange and loss of jobs.

The Executive Secretary, NCDMB, Mr Simbi Wabote, explained that the board’s decision to invest in the Waltersmith’s modular refinery “is in line with our vision to be a catalyst for the industrialisation of the Nigerian oil and gas industry and its linkage sectors.”

“We stand with the desire of the Federal Government to give effect to the recent pronouncements on the establishment of modular refineries. Beyond our interventions in the local supply chain for in-country capacity utilisation, we have broadened our focus to include in-country resource utilisation,” he added.

Wabote said the NCDMB would consider more proposals in line with its published guidelines, stressing that the capacity of such modular refineries should be in the range of 1,000bpd to 5,000bpd.

He stated that the subsequent modular refineries that would be supported by the board would have 70 per cent of their components fabricated in-country.

According to him, the contractor for the Waltersmith project was permitted to fabricate some of the components in Houston Texas, United States, because this was the first time such a project would be executed in Nigeria.