06 October 2014, Lagos – The country’s refineries operated at an average of 10.46 per cent of their combined nameplate capacity of 445,000 barrels per day in June, latest data from the monthly report of the Nigerian National Petroleum Corporation has shown.
According to the data, 244,000 metric tonnes of dry crude oil, condensate and slop were received by the three refineries, namely: Kaduna Refining and Petrochemical Company, Port Harcourt Refining Company and Warri Refining and Petrochemical Company.
“With an opening stock of 428,000MT, total crude oil available for processing was 672,000MT, out of which 221,000MT was processed. The respective average capacity utilisation during the month was 0.00 per cent, 17.96 per cent and 13.44 per cent for the KRPC, PHRC and WRPC, respectively,” the report stated.
The Kaduna refinery had total available crude oil of 169,301MT in the month, but nothing was processed. Out of 289,852MT, the Port Harcourt refinery processed 152,889MT, while Warri processed 68,098MT out of 213,352MT.
The country’s refineries have long been operating well below installed capacity as they are in different states of disrepair. They operated at an average of 31.1 per cent capacity in 2012, according to data from the Central Bank of Nigeria.
“We have four refineries, and yet today, we import almost all the petroleum products from abroad. And so you begin to wonder what is happening here,” said the founder of Mak Mera Group, Chief Mike Olorunfemi.
He noted that government had at a time said it wanted to encourage private sector investors to participate in refining, saying “They gave about 18 licences, but none of them has been able to be on ground simply because they always politicise things.”
Dangote Industries Limited is building a $9bn refinery/petrochemical/fertiliser complex in Lagos. The refinery, which is expected to be completed by 2016, will initially have a capacity of 400,000 barrels per day, doubling the country’s refining capacity as well as cut imports of refined petroleum products.
Nigeria, Africa’s largest crude oil producer, is arguably the biggest importer of refined petroleum products on the continent, creating a lucrative market for refineries, particularly in Europe and the United States.
The country, which is home to over 170 million people, imports more than 80 per cent of its refined petroleum products for the servicing of its economy.
“Subsidies have also contributed to low capacity utilisation at the refineries. In Nigeria, for example, current subsidy schemes lead producers to sell crude overseas rather than to local refineries and, therefore, add to increasing volumes of refined product imports, which present a large cost to the economy,” said KPMG in its 2014 Africa Oil and Gas Report, while noting that problems in the refining industry on the continent included corruption, poor maintenance, theft, and other operational issues.
The government spends about N2tn yearly on fuel subsidies, the Group Managing Director, NNPC, Dr. Joseph Dawha, said at a recent conference.
The operation of the PHRC, which is made up of two of the nation’s refineries, was restricted to about three months last year as a result of pipeline vandalism, according to the Pipelines and Product Marketing Company, a subsidiary of the NNPC.
The Managing Director, PPMC, Haruna Momoh, who spoke at a forum in Lagos, said, “The PHRC operated for only 82 days in 2013 due to pipeline vandalism.”
In February 2014, the country emerged as the largest and second-largest importer of kerosene and jet fuel, respectively from the US, according to data released by that country’s Energy Information Administration, the statistics arm of US Department of Energy.
The EIA data shows that Nigeria imported 864,000 barrels of US jet fuel in February, rising from 292 barrels in January. In November 2013, a record 1.58 million barrels were imported.
Nigeria also brought in its largest kerosene cargo of 292,000 barrels in February, and only its fifth-ever kerosene cargo from the US, including one each in July, October and November.
Last month, oil workers in the NNPC embarked on an industrial action, with their demands including taking immediate steps to carry out turn around maintenance on the refineries and restoration of crude supply to the refineries.