Page 16 - DMEA Week 40 2021

DMEA NEWS IN BRIEF DMEA

but have been in disrepair for many years. OPEC casts doubt on additions in recent years have materialised in
According to the report, Kaduna refinery developing regions with strong oil demand
spent N26.02bn in 2020 on workers’ salaries refinery dislocation as growth, led by the Asia Pacific. As a result,
and also employed 655 new staff. crude and condensate account for the majority
While Port Harcourt refinery put its tonne-mile driver of trade, especially over long distances.
aggregate payroll costs for 2020 at N22.55bn. “Refining hubs in developing countries
The refinery which is currently under There are doubts over whether refinery with highly complex plants such as the US are
rehabilitation employed 487 staff in 2020. dislocation will drive product tanker demand competing increasingly in the international
For Warri refinery, not only did management growth at a pace that will return spot rates product market in line with slower domestic
employed 444 new staff its aggregate employee to profitable levels for the global fleet as demand growth and available feedstock at
cost amounts to N20.51bn. fast as anticipated, according to the latest competitive prices.
LEGIT Organisation of the Petroleum Exporting “For producing and consuming countries
Countries World Oil Outlook. alike, there is an emphasis on securing refined
Reps probe NNPC over end-consumers has long been cited by product supply through domestic refining
The dislocation between refineries and
rather than imports, regardless of economic
refineries contracts product tanker owners, including Ardmore factors.”
Shipping and Scorpio Tankers, as a key factor
Scorpio Tankers, which has a fleet of more
The House of Representatives on Wednesday in boosting tonne mile demand in 2021 and than 130 product tankers and lost $115m
ordered an investigation into the award of beyond. so far this year, forecast in February that
contracts for the refurbishment of refineries Tonne-mile demand, which measures seaborne refined product exports would
by the Nigerian National Petroleum volumes carried by distance travelled, is increase by 6.1% in 2021, compared to 2020
Corporation (NNPC). a proxy for tanker demand. The greater levels this year.
This was sequel to the adoption of a the distance between the refinery and the Accelerating refinery closures across
motion by Henry Nwawuba who alleged consumer, the stronger the demand. Europe, US, Canada, and Australia as well as
that the NNPC awarded the contract for the However, OPEC said refined product trade the starting up of new capacity in Asia and
refurbishment of Warri and Kaduna refineries declined by more than 2m barrels per day the Middle East was cited as one reason why
to SAIPEM and Tecnimont respectively between 2019 and 2020, reaching 15.6m bpd. seaborne volumes would increase.
without the submission of their local Total product flows were estimated to Lost production from the closure of one
content plan for the contract’s execution and reach 19m bpd by 2025 and then drop to refinery in Australia would employ a further
sustainable maintenance. 17.5m bpd over the following five years – 23 medium-range tankers according to the
He said after refurbishing the refineries, essentially returning product trades to 2019 Scorpio presentation last April.
the running maintenance contracts would be levels. Ardmore Shipping cited similar figures
handled by SAIPEM and Tecnimont, “which The numbers are based around OPEC’s in July, as management highlighted the
means that all the money spent by NNPC in already-optimistic reference case for oil accelerated rate of refinery closures due to the
that regard would be transferred abroad, thus demand, as outlined in its World Oil Outlook pandemic as a positive for the sector because
leading to capital flight. released earlier this month. it would add to tonne-mile demand due to
“The glaring deliberate abuse of the That assumes climate-change emission dislocation.
Nigerian Content Development Act by the targets are watered down, electric vehicles OPEC forecasts 4.5m bpd of refinery
NNPC and the contract awarded to foreign comprise only 20% of all cars in 24 years’ time, capacity to be closed between 2020 and 2026,
companies have caused untold economic and oil remains the dominant energy source. mostly in developed countries, while an
hardship to indigenous contractors who OPEC cites the development of new additional 6.9m bpd is added (assuming 90%
employ Nigerian citizens.” refining capacity in Asia and the Middle East utilisation).
The House mandated its Committee as complexes in Europe are shuttered as one Still, there would be a surplus of 4.6m bpd,
on Nigerian Content Development and reason for its refined product trade forecasts. of which 2.3m bpd would be middle distillates
Monitoring to investigate the matter and “Based on the economics of oil movements – jet fuel, diesel and gasoil used for heating
report back within two weeks for further and refining, there is a general preference to and transport – with the biggest overhang
legislative action. locate refining capacity in consuming regions in the Middle East, then the US, Canada and
DAILY TRUST due to lower transport costs for crude oil Europe.
compared with oil products,” the report said. For comparison, total crude refinery
“The majority of refining capacity throughput is estimated to be at 84.7m bpd by

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