There are growing concerns that a lack of funds could jeopardize the development of modular refinery projects in Nigeria, which collectively aim to produce 200,000 barrels of oil per day (bpd).
PLATFORM TIMES gathered that out of 40 licenses issued to companies to operate modular refineries, only five are currently operational.
The licensees are facing significant challenges in securing financing, prompting the federal government to consider revoking the licenses of those unable to progress with their plans.
The Crude Oil Refiners Association of Nigeria (CORAN) has 14 registered members, including the prominent Dangote Refinery. If all active licenses were operational, these refineries could significantly boost Nigeria’s refining capacity.
CORAN recently highlighted that inadequate crude supply has hindered its members’ operations and urged the government to intervene.
However, funding remains the primary obstacle crippling the expansion of modular refineries. Key stakeholders lament the difficulty in accessing necessary funds.
Eche Idoko, CORAN’s spokesman, acknowledged that aside from crude supply, securing finance is crucial for the sector’s success.
The federal government, through the Ministry of Petroleum Resources, has made extensive recommendations to address these issues.
Despite these efforts, the recommendations remain inactive within the ministry.
Captain Emmanuel Iheanacho, Chairman of the Board of Trustees of CORAN and Chairman of Eko Refineries and Integrated Oil & Gas Nigeria Ltd, emphasized the need for greater investment in modular refineries to enhance the downstream sector of Nigeria’s oil and gas industry. Sustainable crude supply to modular refineries, he noted, is essential for supporting transportation and businesses reliant on energy.
Iheanacho disclosed that his 20,000 bpd modular refinery project on Tomaro Island, Lagos, requires about $200 million to begin construction.
This project, like many others, faces significant financial hurdles. He stressed that local refining could provide vital energy resources, lighting, and support for transportation and industrial operations.
He also called for private sector involvement in the conception and operation of modular refineries, noting that existing refineries in Warri, Port Harcourt, and Kaduna are not operational.
His project has completed detailed engineering studies and received the authority to construct but still lacks the necessary financing.
Iheanacho highlighted the capital-intensive nature of modular refineries and compared their financing difficulties to those of owning ships.
He suggested that specialized financing mechanisms, possibly set up by the Central Bank, could help actualize these projects.
He also called for guarantees on crude availability, pointing out the paradox of the Nigerian government selling its share of crude internationally while local refineries struggle for supply.
According to Idoko, CORAN members have 15 licensees that have passed the Authority To Construct (ATC) stage and are close to mechanical completion, contingent on financing.
He criticized the notion of license revocation as a superficial threat, given that many members have had to renew their licenses due to financing delays.
The Petroleum Industry Act (PIA) mandates that every crude producer in Nigeria prioritize indigenous refineries. Section 109 of the PIA requires the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) to ensure domestic crude supply obligations are met, a guideline still under development.
Recent reports indicate that uncertainties around crude oil supply and regulatory challenges are jeopardizing funding for 20 modular refineries in Nigeria, affecting the country’s domestic refining capacity and economic prospects.
International investors demand guarantees for future crude supplies, but regulatory constraints impede the provision of such assurances.
Despite these challenges, industry stakeholders emphasize the potential benefits of a robust refining sector.
They believe that with proper intervention and support, Nigeria could become a regional refining hub, addressing the supply-demand gap for petroleum products in West Africa.
Source :The Leadership
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