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$30 billion fuels import outlay present energy security challenges

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Stakeholders raise concern over shaky downstream sector

Industry stakeholders, yesterday, expressed concerns over the state of Nigeria’s petroleum downstream and of other African countries in the face of emerging global issues.

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With over $30 billion yearly import of Premium Motor Spirit (PMS) into Nigeria alone, the stakeholders insisted that environmental and health challenges of imported petroleum products, closure of refineries across the world, logistic challenges, import of used cars, and other emerging issues could double existing challenges in the country.

They argued that these developments can spike energy security problems amid growing poverty, poor capacity utilisation of existing refineries, and low investment appetite for fossil fuel-related projects.

The experts spoke at a webinar hosted by the University of Port Harcourt, in conjunction with the Nigeria Society of Chemical Engineers (NSChE), as part of the activities marking the 5th International Conference on Gas, Refining, and Petrochemicals.

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The keynote speaker, who is the Executive Secretary, African Refiners and Distributors Association (ARA), Anibor Kragha, speaking on “Getting the Petroleum Refineries Back on Stream: Sustainability and Socio-Economic Considerations,” said populations explosion will force Africa to target sustainable financing options to build refineries and transport infrastructure.

Kragha disclosed that investors were getting worried about investing in the capital-intensive fossil fuel industry, which requires high operational & HSEQ performance amid volatile, internationally impacted margins, high regulatory and country risk, and potential conflicts with global climate change policies.

He insisted that Africa needs a unique sustainable financing and energy transition to produce and distribute cleaner fuels in line with global standards, a safe, secure, economic, and efficient petroleum supply chain as well as concerted efforts towards global climate change policies for alternative fuels.

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He said Africa has no option than to reduce Sulphur in petroleum products to 10 parts per million (ppm) as well as a greater vehicle control system to phase out abandoned vehicles.

To him, efficient, safe, sustainable and economic refinery operations will provide significant positive, multiplier socio-economic benefits to Nigeria and other countries.

Kragha added that rigorous analysis of investments, risks and socio-economic benefits remained essential to attract financing for African refinery and downstream projects, adding that government support, particularly fiscal and regulatory certainty, is required to attract requisite brownfield and greenfield refinery investments

“African countries must follow natural supply chains to promote regional investments and harmonize product quality as well as tariffs to encourage free trade,” he said.

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The Conference Chairman, Tony Ogbuigwe, said peak oil would be sooner than expected, stressing that prevailing challenges have changed the industry’s outlook, especially demand for oil.

Apart from the challenges posed by COVID-19, emerging issues such as climate change, electric vehicles and other actions have created disturbing situations leading to the closure of refineries across the world.

He said it remained pitiable that Nigeria spends as much as $30 billion yearly in importing petroleum products in the face of low utilisation of refineries.

He insisted that Nigeria and other Africa countries must build new refineries and ramp up utilization or risk energy security issues.

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Canvassing a robust refining and petrochemical sector, Ogbuigwe said Nigeria needs to release the potential of existing refineries by adopting an Independent Joint Venture (IJV) model.

He urged the government to divest 51 per cent equity or more of its present stake to private sector core investors, as proposed in the current PIB.

To address ‘dirty fuel’ issues in the sector, he encouraged private investors to invest in hydrodesulphurization to meet extant regulations, and enable the product to be sold across the region.
In his opening remark, the Chief Host and Acting Vice-Chancellor, University of Port Harcourt, Prof. Stephen Okodudu, said while Nigeria is a leading producer, it remained sad that it continues to import refined products.

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Stressing the need to change the narrative, he charged stakeholders to do everything possible to ensure that the country becomes self-sufficient in refined petroleum products.

Okodudu said giving its dynamics; the university is doing everything possible to build capacity in the downstream sector through a series of programmes.

National President, Nigeria Society of Chemical Engineers, Onochie Anyaoku, said the country needs to examine and initiate actionable solutions to reposition the oil and gas value chain.

To him, the window of opportunity in the sector is fast closing as an investment in fossil fuels is drying up.

He said the outlook for energy demand and mix clearly indicates that Nigeria has at best a 10-year investment window to harness resources in the sector or otherwise remain underdeveloped, and called for a blueprint to confront the government and other policymakers to act fast in harnessing the sector’s potential.

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