As a country, it’s delightful to be ranked as the world sixth largest oil producing nation. That is on one hand. On the other hand, given the available indices and present realities, it’s very sad to perceive little or no hope with respect to availability of crude oil for local refining and production!
Worried with the appalling and worrisome turn of events, The Eagle Online recently published an Editorial expressing serious concern about the inability of the first private refinery in Nigeria and the largest single refining facility in the world, Dangote Refinery, to source its crude oil locally for production.
As at early November this year, despite the fact that more modular refineries were set to commence production, they could not due to unavailability of crude oil, according to credible industry sources. Recall in the said Editorial, it was mentioned that as at September 20, 2023, Dangote Refinery’s Executive Director, Devakumar Edwin, confirmed that the firm was importing crude oil and its cargoes were expected to arrive in two weeks time, then. In the commentary, we mentioned that the reason given for the awkward and very strange development was that the Nigerian National Petroleum Corporation Limited had committed its crude oil to other (unnamed) entities. Prior to the shocking revelation, NNPCL in August confirmed that it had signed a $3 billion crude oil-for-loan swap deal with the African Export Import Bank.
It’s also important to note that Edwin in September 2023 confirmed that the facility’s crude oil importation was temporary as the firm would begin to trade with the NNPCL for crude oil from November. This was clearly related in the Editorial. Subsequently, Edwin raised hope that Dangote Refinery would commence production of 370,000 barrels per day – hopefully to increase the Automotive Gas Oil and jet fuel in October. Ditto the production of Premium Motor Spirit, popularly called petrol.
Upon all the promises, what is the state of things? Presently, the situation with the supply of crude oil to Dangote Refinery by NNPCL is sad, worrisome and hopeless. Credible Industry sources revealed that as we speak, the nation’s oil empire is still not in a position to meet up and cope with the firm’s demand!
International Oil Companies are among the key players and critical stakeholders in the downstream sector of our oil and gas industry. Curiously, they have no challenge in getting their crude oil supply from NNPCL. From findings, regrettably, as we speak, the same IOCs prefer exporting the product bought from NNPCL, obviously due to the huge differential in the Naira-Dollar exchange rate.
Of course, we’re fully conscious of compliance to the Organization of Petroleum Exporting Countries production quotas to Nigeria. Still, why should entities such as Dangote Refinery with 650,000 barrel per day production capacity, with more prospects not be given priority? Just like we questioned the AFREXIM crude oil-for-loan swap, we equally assert that the IOCs-NNPCL deals are at the expense of local availability of crude oil, the Naira value and the nation’s economy in general. Certainly, their dealings are suspicious and therefore require a total audit.
Following back and forth, according to Industry watch, the “October production target miss made it the second time in 2023 that Dangote Refinery would raise hopes of Africa, especially Nigeria, of a possible end to petrol importation. However, the failure to begin production means that Nigeria will continue to rely on fuel importation.”
Sadly, the present importation of refined petroleum products into the country has rendered domestic refineries, which could have supported local refining, redundant. Amidst these concerns and contradictions are the ailing NNPCL refineries.
The cabal had in the past used “fictional” turnaround maintenance to lace their pockets and expand their reach.
After spending over N11 trillion on the exercise, we are back to another turnaround phase. Some weeks ago, the Minister of State for Petroleum Resources, Heineken Lokpobiri, promised that the flagship Port Harcourt Refinery and Petrochemical Company Limited would bounce back to work in December this year. The same Minister recently promised that the Kaduna Refinery and Petrochemicals Company Limited would resume full stream production by the end of 2024.
These are only promises. Given the antecedents and the ongoing riddles being orchestrated by the NNPCL, many Nigerians just took the Minister’s commitment with a pinch of salt.
The reason for hopelessness and distrust is that it appears that there is a “grand strategy” where the arrowheads of the present incongruity remotely create a problem and at the same time thwart every move and initiative that would bring a lasting solution to the puzzle.
Indeed, many of our commentaries on economy and government policies have pointed to the fact that there are black sheep in our Oil and Gas industry, sabotaging government’s efforts. We here recommend that this present administration must outsmart the criminal elements and crush them.
Amid the sad tale of local refining, the question is: Is local production of crude oil products still feasible in Nigeria? For a yes answer, President Bola Ahmed Tinubu must further assert himself. Just as we posited in the previous Editorial commentaries, the NNPCL-AFREXIM crude oil-for-loan swap deal is ambiguous. It has a similar outlook with the recent dismissed P&ID scandalous deal. Also, why should the NNPCL crude oil transactions with the IOCs put the giant Dangote Refinery at the receiving end?
As we have done previously, we again call on President Tinubu to launch a total and deep overhaul on the perceived rots in the oil corporation. The same courage the President had demonstrated in the cleansing of the Central Bank of Nigeria and Economic and Financial Crimes Commission should be extended to the NNPCL without delay.
Taking this route is urgent and very significant too. We say this because Nigeria’s economy is crude oil based. In effect, as long as we keep importing refined products, the country and its economy are going nowhere! Consequently, all government’s efforts to put the country on a good pedestal would just amount to motion without movement.
The question is: Can this country at this hard time afford that? With the high level of hunger and anger in the land, no is the answer. Therefore, President Tinubu must note that Nigerians are looking up to him to save the country from this sad tale!