Selling Crude Oil in Dollars Unsustainable for Local Refineries, Says Oyarekhua

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The Chairman of OPAC Refineries, Mr. Momoh Oyarekhua has said that selling crude oil in foreign currencies is not sustainable for local modular refineries in the country, thus calling for the sale of the products in Naira.

He made the call in a statement yesterday in response to the sudden drop in the price of crude oil in the international market due to the collapse in demand as a result of the coronavirus pandemic,
Oyarekhua maintained that the government “has a major role to play, first by ensuring the protection of the private refineries as that will enable the refineries to improve productivity.”

Calling on the federal government to adopt Naira for the sale of crude oil, OPAC’s chairman, also, noted that by doing so, local refineries would have enhanced capacity to meet existing local consumption demands and for optimal performance.

He explained that government ought to support already installed refineries with the supply of crude oil as well as provide the interface for sale of crude in local currency to modular refineries which would eliminate over-dependence on foreign currency for purchase of crude to be refined locally and sold locally in Naira.

According to him, by encouraging the purchase of crude oil in naira by modular refinery owners instead of US dollar, this will create a seamless process that exempts unnecessary complications of hedging against currency exchange.

To maximise the benefits of the existing potential of the industry, Oyarekhua asked the government “to continuously engage some of the frontline players that have installed modular refinery with physical evidence of performance on ground.

He said: “This will enable government to understand its challenges better and, by so doing, provide the necessary interventions to support the growth of these local refineries since doing so will help the country survive and mitigate the anticipated economic recession projected globally.”

He, therefore, called for more investment in local refining as a way out of the economic conundrum and to ensure that the country remains resilient post-COVID-19 and beyond.

He said Nigeria would save itself the embarrassing situation of chasing crude buyers around the world by encouraging and increasing local refining.

He said the country “can eliminate the importation of premium motor spirit and other refined products thereby making it possible that the country cuts its foreign exchange exposure.

“We can save a lot of foreign exchange which will be utilized to fund other important sectors of the economy, which will mean that, as a country, we will not be heavily exposed to the international crude or currency politics.

“More investment is needed to increase our local refining capacity and the government should provide specific ‘target framework’ to further support and encourage local investors in this sector so as to ensure that we produce enough for our local consumption and even for export to earn more foreign currencies while creating jobs.”

Oyarekhua stated that government increasing and doubling support for local refineries would further reduce the hardship faced by some of the players in the downstream sector of the oil industry whilst ensuring that Nigeria can achieve better consumer-friendly pricing for PMS and other finished products which could be produced locally.

He said: “As a nation, we must boost the capacity of our local refineries and scale the modular refineries to meet the challenges of the future and to also sustain the gains we have made in the oil and gas industry.

“Where we operate in Nigeria, we have been in full lockdown for the past five weeks. The lockdown was relaxed a bit this week, although we still advised our staff to remain at home.
“We do the best we can from home to look after our business, but the situation is not optimal. Of course, this delayed the test round for the OPAC modular refinery, which was scheduled for the end of March.”