Nigeria’s modular refineries, a critical component of the country’s petroleum industry, are facing an existential threat due to challenges in accessing foreign exchange (forex) for the purchase of crude oil, a commodity priced in United States dollars.
The situation puts their operations at risk and could lead to potential shutdowns.
With 25 licensed modular refineries across Nigeria, boasting a combined capacity of producing 200,000 barrels of crude oil daily, these facilities play a crucial role in refining petroleum products for domestic consumption.
However, the worsening foreign exchange crisis in the country has made it increasingly difficult for the operational modular refineries to procure crude oil.
The current global benchmark for crude oil, Brent, trading at over $80 per barrel, underscores the urgency of the situation.
Despite their significant refining potential, the modular refineries are struggling to access the necessary foreign currency to purchase crude oil, which is priced in dollars.
The Crude Oil Refinery Owners Association of Nigeria has highlighted the challenges faced by modular refinery operators.
They assert that the scarcity of dollars has made it nearly impossible to procure crude oil, resulting in a domino effect where refined products cannot be supplied to oil marketers for distribution.
Eche Idoko, the association’s Publicity Secretary, emphasized that unless a solution is found, modular refineries may be forced to cease operations.
He called attention to the need for crude oil to be sold in naira, a move that could ease pressure on the currency and make diesel more affordable.
The threat to modular refineries not only jeopardizes the country’s petroleum production capacity but also underscores the broader economic challenges facing Nigeria amidst the ongoing forex crisis.
