Operators advocate increased refining capacity to meet local demand

Players in the oil and gas sector have called for a significant increase in Nigeria’s refining capacity to address the growing demands for refined petroleum products and tap into the country’s export potential.

The call comes amid ongoing fuel scarcity as they believe that boosting refining capacity is crucial for achieving self-sufficiency in petroleum products.

They made the call during a webinar organised by Major Energies Marketers Association of Nigeria (MEMAN) where they emphasised that the lingering fuel scarcity, occasioned by long queues at filling stations and price hikes across the country, further highlighted the need to increase local refining capabilities.

Vice Chairman of the Crude Oil Refinery-owners Association of Nigeria (CORAN), Oludolapo Okula-kotun, said there is a need to be intentional about improving the country’s refining capacity.

She stressed that the country needed to find sustainable ways to maximise production, not only to improve it but also diversify energy mix.

She mentioned that it should be the uppermost priority of the government to ensure that all in-country refineries are adequately and promptly supplied with appropriate quantities of feedstock for them to be able to refine at optimal capacities.

“We have cases where some of our members, who can do 10,000 barrels per day (bpd), which is 300,000 barrels per month, are being given 30,000 barrels for the whole month. It doesn’t make any sense. Refineries should not be restricted in their ability also to export certain percentages of their products through ports, which will enable them to generate U.S. dollars through this as well as from local sales for investment and loan repayments,” she said.

She added that the government needed to tackle corruption in the fuel distribution system and strengthen regulations to prevent the hoarding and diversion of crude oil, suggesting that all aspects of the country’s crude oil business should be run by both the private sector and the Nigerian National Petroleum Company (NNPC).

She urged the Nigeria Mainstream and Downstream Petroleum Regulatory Authority (NMDPRA) to make licensing easier and cheaper. The CORAN VC added that there is a need for refinery development space to have access to intervention funding.

“I was a member of the former Minister of State’s Steering Committee for Intervention Funding, and there was a white paper that was developed where it was approved theoretically that refineries should have access to an intervention fund, just like that section has. When we are seeking offshore funding and investors, they also require us to have some cash equity, sometimes up to 20 per cent on the table.

“We definitely need more Federal Government support to be determined and implemented, but mainly licensing, financial infrastructure, asset and feedstock security incentives and the like. We also would suggest and would like a review, amendment and immediate implementation of viable sections of the PIA, a major need for the refinery industry right now is the domestic crude oil supply obligation,” she said.

Managing Director, NNPC Retail Limited, Huub Stokman, said growth in domestic refining capacity will greatly improve petroleum products supply leading to the elimination of importation and the eventual export of petroleum products.

He stressed that an increase in refining capacity would meet local demands and enable export capacity, noting that domestication of the energy supply chain will also ensure energy security in the country.

Stokman pointed out that increased investment in pipeline infrastructure and continued investment in road infrastructure to guarantee the smooth distribution of products would increase delivery efficiency.

“Stable and strengthened FX position will be crucial in managing supply shocks in a deregulated market. The regulatory posture of the Authority and drive to create an enabling business environment and a potential introduction of backward integration of policy per the PIA,” he said.