The Managing Director of Aiteo Energy Resources, Mr. Ewariezi Useh, has cautioned the country against over-reliance on modular refineries, stating that the country’s fuel supply challenges cannot be addressed by modular refineries alone.
Speaking at the just concluded 2019 Nigerian Oil and Gas (NOG), Conference and Exhibition, Useh disclosed that most modular refineries produce only diesel, adding that significant investments are required before a modular refinery can begin to produce petrol.
“Modular refinery is not a permanent solution to our import crisis. The capacity of a modular refinery is about 5,000 and 10,000 barrels per day (bpd). The product gotten from it is a desolated unit.
“The first product you get from the modular refinery is diesel and then kerosene. The big question to ask is such that in Nigeria today, how many cars are running on diesel? It is only used on generators and some commercial buses. You would get more of diesel from modular refineries.
“However, if you are to get petrol from a modular refinery, you would need to have Fluid Catalytic Cracking (FCC) unit attached to it, which is way expensive and only a few people can put that kind of fund today
“FCC is one of the most important conversion processes used in petroleum refineries. It is widely used to convert the high-boiling, high-molecular-weight hydrocarbon fractions of petroleum crude oils into more valuable gasoline, olefinic gases, and other products.
“The issue today for our country is that we consumed more of petrol, from your small generator ‘I better pass my neighbour’. So, modular refineries are not the final solution,” he insisted.
Useh explained that the right policies and the right environment would bring the much-needed investments to the refineries as the country’s refineries were not enough to meet the country’s fuel demands.
“Painfully our refineries are not functional. But even if we have all those refineries working, their total capacity is 410,000 barrels and Dangote is putting on 650,000 barrels. Those refineries are built in the 1960s and the newest of them all is the Port-Harcourt refinery. These are not enough to meet the demand of our 200 million people.
“The refineries are old. We need favourable policies that can attract investors to come in and build refineries and see how the terrible, old ones can be revamped and put together. We are the only OPEC country still importing petrol and the situation doesn’t look good.
“However, the challenge is that will you invest in a place where you are not sure of your returns? The answer is no. It is simple, because every investor wants a return and guaranteed investment as well. There is no attraction in the downstream business in Nigeria.
“We hope that the passage of the Petroleum Industry Bill (PIB), which will define clear the regulation for the industry to detail clear cut margins of the prices. A guaranteed margin, the environment will bring investors into the sector. Even if our local refineries are operational, they are subsidising and will not get their full returns, which is why the refineries are not working. There is no money to run them.”