A Review of the Nigerian Energy Industry

Govt approves establishment of modular refineries

09 December 2014, Abuja – Exactly 12 years after the Federal Government granted licenses to private investors to build 18 refineries without any success; President Goodluck Jonathan has approved the establishment of a modular refinery initiative to ease local supply of petroleum products, especially household kerosene (HHK), which does not require sophisticated technology to produce.

Nigeria’s four refineries, with combined capacity of 445,000 barrels per day have long been operating well below optimum capacity as they are in different states of disrepair.

The federal government had granted licenses to private investors to build 18 refineries since 2002 but none of them was successful, 12 years after.

The licensees included Akwa Ibom Refinery and Petrochemicals, Tonwei Refinery, Badagry Petroleum Refinery, Clean Water Refinery, IIaje Refinery and Petrochemicals, Niger Delta Refinery and Petrochemicals, NSP Refinery and Oil Services, Ode Ade Refinery, and Orient Petroleum Resources Ltd.

Others are Owena Oil and Gas, Rivgas Petroleum and Energy, Sapele Petroleum, Southland Associates, Southwest Refineries and Petrochemicals Company, Starex Petroleum Refinery Ltd, The Chasewood Consortium, Total Support Refineries and Union Atlantic Petroleum.

But speaking at the recently concluded 16th biennial conference on Health, Safety and Envrionment (HSE) organised by the Department of Petroleum Resources (DPR), the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke said aspiring modular refinery operators would be scrutinised and granted license to install and operate such facilities.

According to her, it is the belief of the federal government that the short project cycle, low cost and flexibility for establishing modular refineries would encourage proper investment in refinery operation and minimise crude oil theft and operation of artisanal refineries.
The minister further stated that to ensure the success of the modular refinery initiative, several financial institutions had been approached to assist operators in the funding of the initiative, adding that the regulatory agency would soon roll out the details of the programme.

“Perhaps, one of the main indicators of the success of the initiatives of government in the sector is the continued availability of petroleum products to the populace, compared to the experience of the past, when Nigerians queue endlessly at filling stations for poor quality gasoline and adulterated kerosene that killed innocent people. In furtherance of efforts of government at deepening the participation of indigenous investors in the sector, the President and Commander-in-Chief has graciously approved the establishment of Modular Refinery initiative to soften local supply of petroleum products, especially kerosene, which does not require elaborate technology to produce,” she said.

The minister, who was represented by the Director of the DPR, Mr. George Osahon, said the position of Nigeria as a major player in the oil and gas industry had been threatened by security challenges, which made oil theft and pipeline vandalism a common topic of discussion among industry players.

“The federal government views with grave concern the debilitating consequence of the activities of pipeline vandals, oil thieves and operators of illegal refineries, otherwise known as ‘artisanal refiners.’ The effects of these activities have not only resulted in great loss of revenue accruable to government, but also led to loss of several lives and property, damage to the environment and socio-economic disconnect,” she added.

Despite her position as the highest producer and exporter of crude oil in Africa, Nigeria is the biggest importer of refined petroleum products on the continent, creating a lucrative market for refineries in Europe and the United States.

To shore up the nation’s refining capacity,  Dangote Industries Limited is building a $9 billion refinery and petrochemical/fertiliser complex in Lagos, which is expected to be completed by 2016, with initial capacity of 400,000 barrels per day.


– This Day

In this article

Join the Conversation