Industry operators oppose Refineries’ sale

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Opposition are mounting against the sale of the four refineries of the Nigerian National Petroleum Corporation NNPC but are in support of weaning them from the meddlesomeness of the federal government.

 
The four refineries that are in Port Harcourt, Warri and Kaduna just re-commenced work after years of inactivities that have attracted criticisms from NIgerians.

 
 Participants at the just concluded 4th Port Harcourt international petroleum downstream conference on gas, petroleum refining, petrochemicals and fertilizers said the major problems of the nation’s refineries do not reside in lack of capacity of the Nigerian technicians operating them; but rather due to ”political meddlesomness,” orchestrated by unexplained greedy disposition of some NNPC top managers.
 
They blamed political consideration against technical competence, rationing of crude feedstock supplies anD facilities vandalism as factors that have combined largely to bring about inefficiency, low production volume and attendant products scarcity.

They cited the Port Harcourt Refining Company (PHRC), which turnaround maintenance (TAM) was completed recently by Nigerian engineers, after over a decade of Federal Government’s prevarication. The refinery is said to have been refining products, and would attain 90 percent production level by Q1 2016.

According to the participants, which included globally renowned experts in oil and gas, oil refining, leading American chemical engineers, marginal field operators, petrochemicals and fertilizers companies, gas value chain experts, economists and academics, the NNPC refineries were still among the young refineries in the world, with the oldest, Port Harcourt Refinery 1 built only about 50 years ago. Also, they said the erefineries have largely remained inactive for most periods, because issues of meddlesome ownership, an indication that their equipments may not have seen optimum production usage.

Meanwhile, a recent survey of the performance of African refineries indicate that Nigeria’s four refineries were the lowest performed with 18 percent, with their greatest problems being that of feestock supply hiccups.

Speaking on one of the lead papers titled: “NNPC Refineries: To sell or not sell? A Review of Current State of Nigerian Refining Industry and Potential Future Evolution,” Babajide Soyode, one of Nigeria’s renowned oil refining experts, said the greatest problem of the NNPC four refineries is “meddlesome ownership”; stressing that unless they were brought out of that situation, the refineries would continue to operate in fits and starts; with many adjudicating for their sale or privatization.

Soyode is neither in support of outright sale nor privatization; but he called for full commercialization of the four refineries, drawing the examples of India and Mexico which have doing pretty well with the option.

He advocated that the nation’s refineries should be valuated as ‘going concerns’, rather than their present undefined operational status.

However, Soyode informed that over the years, greed and lack of political will have stalled the NNPC refineries from being commercialized.

He said private participation in the refinery system was now most imperative; though not allowing them to degenerate to ‘private monopoly.’

He said that the current reforms at the national oil company under the President Mohammadu Buhari government were in the right direction; but warned that they must move up to weaning the refineries from the ‘meddlesome ownership,’ and make them more efficient and effective. So that they can soon begin to attain optimum production levels.

On the vexed issue of crude feedstock supply hiccups to the refineries, Soyode advocated for ‘alternative feedstock supply sources and newer pipelines; noting that the Escravos Trunk Line, which supplies crude to the Kaduna Refinery is about 40 years old, and needed a change.

For Soni Oyekan, president and owner of Prafis Energy Solutions, USA, a globally renowned expert in oil and gas and oil refining, and one of the leading American chemical engineers, who was a keynote speaker on “Boost Nigeria’s Economy via Gas Monetization and Oil Refining,” the country must move into oil refining using its refineries by making them ‘toll refineries’, build miniature refining outfits and undertake huge gas utilization and exports.

Felix Amieyeofeori, the managing director and chief executive officer of Energia Limited, said, Nigeria must take gas resource as a good revenue source; adding that gas is one of the clean energy sources. And gas availability, he insisted, comes from undertaking crude production, oil refining and gas gathering and utilization.

On the debates on getting right the gas master plan, building gas infrastructure and gas price fixing, Amieyeofeori advocated for Nigeria to allow market forces of demand and supply to determine the price of gas; while the nation must also invest heavily in encouraging the building of gas infrastructure.

Amieyeofeori said that gas can fuel the nation’s economy, if properly harnessed; citing examples in Saudi Arabia and Russia.

According to Oyekan, a Nigerian born international chemical engineer, who has provided technical and process technology management for over 30 refineries globally, including 21 refineries of Sunoco, BP/ Amoco, Nigeria must move away from whole crude export to revamp oil exploration and production (E&P) sector, with enormous amount of in-country oil refining.

He also advised that the nation must balance its gas export, which he said, is one of the clean energy sectors much sought after globally.

Oyekan agreed with Soyode that Nigeria must make its economy to be tax-driven, where tax revenue should constitute a major part of the gross domestic product (GDP). He said currently Nigeria’s tax revenue contribution to GDP is 6.1 percent; whereas countries like Tanzania has 12.0 percent.

He said Nigeria must boost investor confidence, balance its gas export, engage in building more petrochemical plants that would utilize the abundant gas reserves in the country.

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