Says refineries operating at 60% but need $700m to upgrade to 90%
Ernest Chinwo in Port Harcourt, Chineme Okafor in Abuja, Adibe Emenyonu in Warri
Minister of State for Petroleum, Ibe Kachikwu, has said the lingering fuel shortages in major cities across the country would gradually ease off with coming on stream of refineries, which require about $700 million to upgrade and operate at 90 per cent capacity.
Kachikwu, who noted this when he re-commissioned the 46-km Escravos-Warri pipeline, however warned that the long-term solutions would take time.
According to him, “It is going to take time because we are addressing a long-term solution. There is a lot of policy issues coming in to ensure that we resolve this and we would not need to go back to the pipes over again.
Kachikwu, who also inaugurated the Bonny–Eleme Refinery crude pipeline to formally bring it on stream, added: “When the upgrade and repairs, led by the foreign investors, with our joint team, are concluded, our capacity will move from about 50 per cent to about 90 per cent, resulting in movement from 12 million litres to slightly in excess of 20 million litres production per day. The co-located refineries that we have also advertised, which will be private sector-led, by the time they are attained in about two years, there will be excess of 750,000 barrels refined petroleum production capacity per day.
“Our hope is that by 2018, fuel importation will be reduced by at least 60 per cent, because of the upgrade that would have taken place. By 2019, when the co-located refineries are in place, we will actually be exiting importation and begin to export refined petroleum products. That is the strategic way. That is what we are working on.”
He called on Nigerians to collectively tackle the issue of pipeline vandalism.
Kachikwu at the event, also disclosed both Warri and Kaduna refineries which had been cut out from supply of crude oil due to the vandalised pipeline are now receiving crude simultaneously for the first time in many years.
He said the Warri refinery had already started working while Kaduna will start production at the end of the month.
According to him, this means that for the first time in many years, the nation’s three refineries at Port Harcourt, Warri and Kaduna, as well as major crude pipelines in the country will be working at the same time.
Kachikwu stated in a statement from the spokesman of the NNPC, Mallam Garuba Deen Muhammad, that the Escravos terminal was the heartbeat of the downstream sector of the country’s petroleum industry, adding that it was critical to local supply of finished petroleum product as both refineries in Warri and Kaduna are majorly fed from Escravos crude stock.
“The challenge of this country is the challenge of focus and stewardship. For the first time in many years the three refineries are going to be working and it will help in a great deal with the issue of fuel supply and distribution across the country and it will go a long way to manage the fuel crisis,” said Kachikwu.
The minister enjoined Nigerians to be more patient as the NNPC was working hard to end fuel shortage across the country.
On that, he stated: “I appreciate the patience of Nigerians and I am committed and focused to make petrol available to all nooks and crannies of Nigeria.”
It is equally understood that the pipeline which has some of its axis underwater especially at challenging terrains to make it quite difficult to vandalise, was built by Ocean Marine Solution.
Its chairman, Captain Hosa Okunbor, told journalists that the completion of the multi-billion naira project was made possible by President Muhammadu Buhari, who insisted on bringing total reform in the oil and gas sector.
He noted that this is first time in the last 10 years that crude will be delivered to the Warri refinery through pipelines.
Okunbor who disclosed that his firm was also undertaking similar project between Bonny and Port Hacourt refinery, expressed strong confidence that with three refineries Warri, Port Harcourt and Kaduna, refining petroleum, the scarcity of the petroleum industry products would soon be a thing of the past.
“Today, we are very glad that for the first time over 10 years we are able to deliver the crude line between Escravos and Warri and crude is now flowing through the pipeline which was impossible over the years…
“For me, am so glad because sometimes there are certain things you achieve that are more than money. We have created serious value for this country using our own resources.
He added: “The community are able to cooperate with us. We used carrot and stick approach and our security surveillance and also the contract of actually doing the job and replacing the contract. It was very tedious and sometime we almost got killed and threat to our lives which informs why you see all these security around us. We have put our lives on the line to deliver Escravos, we have also delivered Bonny to Port Harcourt and today there is crude in Port Harcourt that is flowing to the refinery and the same thing with Warri refinery.
“As a company it was a big gamble to do this. We spent billions without a penny from NNPC but today we have cured the problem. A lot of people did not understand, some wrote petitions that we were given contract, at a point my name was going to be soiled and I believe in my name. I am a role model to my family and the people on the street and that is what gave the will to deliver this.”
Kachikwu, who stated that the daily consumption of premium motor spirit (pms) currently stands at about 45 million litres, pointed out that the refineries now operating at 60 per cent capacity could only produce 12 million litres. He however added that there was need to upgrade the refineries to produce at 90 per cent minimum to produce about 20 million litres.
He said the corporation was already sourcing for foreign investors to raise the necessary funds.
He however said the foreign investors were not coming to run the refineries but only to provide the needed capital and technical assistance.
“We have signed the advertisements for investors to come in. There is no confusion about what they are coming to do; they are not coming to run the refinery. They are coming to provide funds to take our performance on these refineries to 90 per cent and to provide us with technical skills. So, the areas of intervention will be funding and technical support,” he said.
He explained that, “Port Harcourt is back in production, Warri is back in production. Kaduna today is receiving and will soon be back in production. It is something of joy. These are problems we set out to correct and we are correcting one by one.
“I thank Nigerians for their patience and I urge them to remain resilience, support what we are doing because this is the only way to change the system. We may see all kinds of publications, all kinds of attacks; I don’t focus on these, I focus on the results and the results are coming out.
“Total investment for that is up to $700 million and we don’t have that. Let us be honest about it. So, the best thing to do is to find a very creative way to bring in investors, who will come in, work with our team here, who have the skills, reactivate and upgrade facilities in this place and help us provide technical support and we will pay through the flow-out of the refined products over time.”