Page 16 - DMEA Week 40

DMEA REFINING DMEA

NNPC extends oil-for-fuels scheme

NIGERIA NIGERIA’S state-owned NNPC will continue its world-class capacity utilisation levels,” Kyari
crude oil-for-products swap programme until said.
The scheme has saved 2023, its managing director Mele Kyari told a The state-owned refineries have a nameplate
$1bn per year since its conference on October 6. capacity of 445,000 bpd, but NNPC revealed last
introduction in 2016, The country, Africa’s biggest oil producer, year they were running at a mere 5.6% of this
NNPC says. relies heavily on fuel imports, as its main domes- output. The low quality of the fuel they produce
tic refineries are in a state of disrepair and have has also contributed to pollution problems in
been closed down. This significantly under- Nigeria’s largest cities. NNPC said it would close
mines its trade balance. the facilities down completely in April while it
Speaking at the African Refiners Association arranges plans to upgrade them.
conference, Kyari said that an agreement with 15 Kyari said it was important that product
trading companies and refiners on gasoline sup- storage depots and pipelines are also restored,
plies in exchange for crude oil had been extended adding it was offering investors build, operate
for six more months until the end of March. The and transfer contracts for the facilities. NNPC
swap deal will continue until Nigeria’s refining opened a tender for the pipelines in August and
industry is ready to meet domestic demand in intends to announce winning bids in the first
three years, he said. quarter of 2021.
Kyari said the direct sale, direct purchase Nigeria also wants to build up its gas industry
(DSDP) agreement had saved some $1bn per to improve energy security. Recently its central
year since its introduction in 2016. Previously bank unveiled a NGN250bn ($648mn) stimulus
Nigeria relied on “offshore processing agree- package that it hopes will encourage compressed
ments,” criticised for their lack of transparency natural gas (CNG) in vehicles, and liquid petro-
and high cost. Under the DSDP deal, NNPC pro- leum gas (LPG) use in domestic cooking and
vides crude oil on a free-on-board (FOB) basis power generation.
to fuel suppliers, which in turn deliver petro- Kyari described gas as the “fuel choice for the
leum products to NNPC at designated ports in future.” Despite having an estimated 5.3 trillion
Nigeria. cubic metres in proven gas reserves, the coun-
Private Nigerian conglomerate Dangote is try’s investments in gas supply beyond its LNG
expected to bring on stream a 650,000 barrel export plants has been limited.
per day (bpd) refinery in Lekki in 2021-22. “The outlook for Nigeria’s downstream sector
But NNPC also wants to overhaul the coun- looks bright with attractive market conditions,
try’s four state-owned plants. It is working large market, significant crude distillation capac-
with international engineering, procure- ity additions from various refinery projects,
ment and construction (EPC) contractors “to improvements of the distribution network and
revamp the existing refineries to operate at the use of natural gas,” Kyari said. ™

P16 www. NEWSBASE .com Week 40 08•October•2020