Poor refining capacity, policy thrust threaten $110m chemical market

There are growing apprehensions that the sharp drop in the functionalities of the domestic refineries may jeopardise the future of the chemical market, estimated at about $110 million.

Indeed, the stakeholders, who gathered at the maiden national oil and gas production/process treatment chemicals seminar, organised by the Nigerian Society of Chemical Engineers (NSChE) in Lagos at the weekend declared that the sub-sector is presently undergoing recession, ocassioned by the challenges in the upstream and midstream petroleum sector.

The Chief Executive Officer, Matrix Petro-Chem Limited, John Erinne, who is a lead speaker at the forum, said the several treatment chemicals are applied to achieve numerous goals including, fluid quality compliance; flow assurance; integrity protection and regulatory compliance, hence the need for government to aid operations in the chemical sub-sector.

According to him, production chemicals market which is mostly applied to the upstream operations in Nigeria worths about $100 million yearly, while processed chemicals (mostly for midstream) worths between $7 million to $10 million last year.
Erinne said this market’s base could however be doubled if the refineries are revived to work optimally.

Expressing dismay on the collapse of the Nigerian National Petroleum Corporation (NNPC) refineries, he advised that the Federal Government should encourage private sector investors such as the Dangote refineries to float new plants. He however noted that the increasing deep offshore activities has spurred chemical industry growth from  seven percent to 10 per cent in the last decade, urging the legislators to pass the Petroleum Industry Bill (PIB) into law, in other to encourage further investments in the upstream and indeed the deep offshore projects.

He also enjoined the NNPC to put all mercenaries in motion to rescue the refineries from complete collapse, adding the new Dangote refinery portend a great prospect for the industry, including the Total’s Egina deep offshore project expected to take off in 2016.

The industry chieftain also lamented the stiff requirement for licencing by the Department of Petroleum Resources (DPR), and the bottleneck faced from National Food Drugs Administration and Control (NAFDAC) and Standard Organisation of Nigeria (SON) in their regulatory measures, adding that the NAFDAC and SON measures are needed go be harmonised for greater efficiency.

Another speaker, Sylvester Ohwo of Seplat Petroleum who spoke on challenges and prospects in production treatment for indigenous producer, bemoaned the high cost of chemicals treatment vis a vis the dwindling crude oil prices.

He said there was need to increase awareness on local blending to reduce importation to mainly concentrates and encourage building local blending plant plants.

The General Manager, Projects and Operations, Nigerian Content Development and Monitoring Board, Paul Zuhumben, enjoined the local operators to draw up an investment plan that would boost local manufacturing and storage capabilities.
He said local content is a game changer and must be a national agenda which everybody shall continue to enjoy.

Chairman, Nichem Ventures Limited, Engineer David Adewunmi Adeyemo, added that the oil price has continued to crash and the talk of the industry is now whether there will be an industry or not.
“For us, we hold the optimistic position that the equilibrium will be found and oil production will continue in Nigeria.
NAPIMS which is the ultimate manager of Nigeria’s oil and gas asset and Nichem Ventures, the commercial arm of the NSChE have put this together to fashion a way out for our industry,” he said.