A Review of the Nigerian Energy Industry

NEITI seeks review of 445,000bpd domestic crude oil allocation to NNPC

NEITI03 March 2014, Abuja – The Nigeria Extractive Industries Transparency Initiative (NEITI) has asked for a quick review of the 445,000 barrels per day (bpd) domestic crude oil allocation to the Nigerian National Petroleum Corporation (NNPC).

NEITI in a presentation to the House of Representatives on the Berne Declaration Report, which indicted the NNPC of inordinate crude oil trades, hinged its call on the dysfunctional state of Nigeria’s four major refineries in Port Harcourt, Kaduna and Warri, managed by the NNPC for which it gets the domestic crude oil refining allocations.

A copy of the NEITI presentation in Abuja, observed that the refineries are operating far below their name plate capacities and that their operational and overhead costs are the same irrespective of the volume of production.

NEITI posited that while the federal government should consider privatising the four refineries with a combined design capacity of 445,000bpd, the 445,00bpd allocation to NNPC should be reviewed to the actual refining capacity of the refineries while pipeline security should be enhanced along their rights of way.

It provided a detailed crude oil allocation and refining figure to the Port Harcourt Refinery from 2009 to 2011, stating that the refinery got 161,916bbl but refined only 19,363bbl in 2009; 166,523bbl in 2010 but refined 34,703bbl same year, while 164,454bbl was allocated in 2011, whereas only 45,394bbl was refined.

NEITI further explained that while Port Harcourt Refinery got a total of 492,891bbl allocated to it within the period, it was only able to refine a total of 99,458bbl from the total allocation, adding that it delivered just about 20.2 per cent of its refining capacity.

“The PHRC old refinery has been moribund for about 20 years. As the refineries got older, their performance deteriorated due to the poor maintenance culture in place. The refineries are operating far below their name plate capacities. The 445,000 barrels per day allocation should be reviewed to the actual refining capacity of the refineries,” it stated.

On NNPC’s alternative arrangements for the domestic crude allocation, NEITI said: “As NNPC could not utilise its domestic allocations, the crude oil not refined is usually exported. However in 2010, NNPC/PPMC came up with additional arrangements which include offshore processing, crude oil exchange, product exchange.

NNPC made agreements with Societe Ivoirenne De Raffinage, (SIR) and Nigermed and others for processing some quantities of the crude oil offshore. Part of the refined products such as PMS, AGO and DPK are returned whilst LPG, VGO and Fuel Oil (LPFO and HPFO) are retained and paid for at a negotiated price.”

NEITI also stated that NNPC has other arrangements in place to enable importation of products into the country within a short period to avoid scarcity when other arrangements become unreliable, which is a form of barter.

It further said on the barter trade that: “Some of such barter agreements include: PPMC/Duke Oil-Taleveras-Crude Oil – Refined Products Exchange Agreement; February-December 2011.  PPMC/Duke Oil-AITEO Crude Oil-Refined Product Exchange Agreement; February – December 2011. PPMC/Duke Oil-Ontario-Crude Oil-Refined Products Exchange Agreement; February-December 2011. PPMC/Trafigura Crude Oil-Refined Product Exchange Agreement-Liftings and Deliveries; October-December 2010. PPMC/Trafigura Crude Oil-Refined Product Agreement- Liftings and Deliveries; January-December 2011.”

– This Day

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