Page 4 - AfrOil Week 23

AfrOil PiPElinEs & tRansPoRt AfrOil
Nigerian oil theft compounds mid- and downstream woes
nigERia
A report released last week by Bloomberg found that oil the in Nigeria since 2014 had cost the country around US$2.7 billion per year. The report added that stolen oil volumes had risen to 100,000 bpd in the last few months.
Meanwhile, Royal Dutch Shell said that oil the had resulted in an 80% increase in oil spills last year. e importance of oil export sales to Nigeria is hard to overestimate, accounting for around US$43.6 billion in 2018, according to the WTO and UN.
Bloomberg quoted Ledum Mitee, a lawyer and minority rights activist and former head of the Nigeria Extractive Industries Transparency Initiative (NEITI), as saying that around 500,000 people are engaged in oil the in the country.
e stolen oil is taken to illegal re ning facil- ities, dotted around the Niger Delta, for process- ing. However, despite widespread small-scale illegal re ning and a nameplate capacity of o - cial nameplate capacity at state-owned re neries standing at 445,000 bpd, imported fuel is still in high demand.
Nigeria National Petroleum Corp. (NNPC)’s latest monthly nancial and operations report (for January 2019) showed that despite the coun- try producing more oil during the year, Nigeria’s reliance on imported fuel also grew, with total consumption during 2018 coming in at 6.7 bil- lion litres.
Nigerian oil analyst Jubril Kareem told AfrOil this week: “ e illegal re neries are not particu- larly bene cial to the communities other than generating money for the bandits that run them.” He added: “ e quality of their output is poor and have long term impact or vehicles and equipment that use them, but their low price relative to nor- mal products may still make them popular with locals and some service stations that secretly and illegally add them to their inventories.”
In mid-March this year, NNPC revealed that operational losses at the facilities totalled 131.6 billion naira (US$365.4 million) in 2018, up from 32.8 billion naira (US$91.1 million) the previous year primarily as a result of worsening performance at its Port Harcourt re nery in the Niger Delta.
Abuja has sought to ramp up domestic re n- ing capabilities, focusing on both rehabilitating the chronically underperforming state-owned units and encouraging investments in new pri- vate facilities.
Meanwhile, progress was made in the state sector, with Maire Tecnimont con rming in late March that it had been awarded a contract by NNPC to rehabilitate the refining com- plex at Port Harcourt. e facility comprises two plants, built roughly 25 years apart, with
combined capacity of 210,000 bpd.
e Italian company said that the contract
involved two phases. e roughly US$50 million rst stage would encompass a six-month ‘integ- rity check’ and equipment inspection at the site, as well as ‘relevant engineering and planning activities’.
Abuja’s record in encouraging the develop- ment of private re neries to plug the gap in state provision has long been little better.
In 2015, incoming President Muhammadu Buhari oversaw the issue of around 25 licences to investors planning to establish private re ning facilities throughout the country. ese had an initial deadline of two years to meet the condi- tions to move from the “licence to establish” to the “approval to construct” (ATC) phase before the former’s expiry. As has been the case with many of the country’s e orts to incentivise such developments, little credible has been heard since.
The dramatic exception is the estimated US$15 billion world-scale green eld re nery under construction at the Lekki Free Trade Zone near Lagos by the local Dangote Group conglomerate.
e developer obtained a groundbreaking multi-billion-dollar international debt package six years ago and the 650,000-bpd plant is due to be commissioned in 2020, promising both to end petroleum product imports and to generate considerable export revenues.
In January, billionaire president Aliko Dan- gote publicly insisted that the scheme was on track, amid rumours of a two-year delay, and the crucial Residual Fluid Catalytic Cracker unit was delivered earlier that month.
Kareem told AfrOil though that the “Dangote re nery will not have any e ect on illegal re ner- ies.” He explained that “over the past 2 to 3 years, there has been uninterrupted supply of products in the local market and yet illegal re ning still continue. e motivation [...] is not availability but generating income”.
A programme to establish smaller modular re neries has also picked up pace over the past two years or so, and in August 2017, the US Trade & Development Agency (USTDA) signed a deal with EKO Petrochemical & Re nery Co. to pro- vide seed nancing of US$800,000. is was ear- marked to fund the performance of a technology and engineering design study by Texas-based VFuels Ltd. on a proposed 20,000-bpd modular re nery at Tomaro Port near Lagos.
In late March this year, the USTDA pledged to assist EKO in sourcing further US nance, with total project costs were estimated at US$120 million.™
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w w w . N E W S B A S E . c o m Week 23 11•June•2019