FG Selects Two Investors to Build 217,000bpd Refineries in PH, War
18 Aug 2017
The federal government has stated that two private Nigerian firms have been selected to build 217,000 barrels per day refineries in Port Harcourt and Warri under the co-location concept initiated by the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu.
Modalities are also being worked out by the federal government to offer financial support to operators who were licensed to build modular refineries in the country.
Kachikwu had initiated the concept of co-location of refineries to ensure that new refineries are set up to share infrastructure with Nigeria’s existing refineries in Kaduna, Port Harcourt and Warri, to boost domestic petroleum products refining capacity.
The minister had told journalists at the 2017 edition of the annual Offshore Technology Conference (OTC) in Houston, Texas, that the take-off of the scheme was being delayed to enable the Nigerian National Petroleum Corporation (NNPC), which owns and operates the three existing refineries that would host the new ones, time to understand and subsequently come to terms with it.
Kachikwu had added that the corporation was initially uncomfortable with the idea of having additional refining units at its existing complexes, which it still had challenges fixing.
But speaking Thursday in Lagos at the conference of the Association of Energy Correspondents of Nigeria, the Chief Operating Officer in charge of Refining and Petrochemical at the NNPC, Mr. Anibor Kragha, stated that the NNPC had actually identified two private companies that will build two refineries under the co-location arrangement.
Ten investors were said to have shown interest and competence to build new refineries near the existing ones.
Kragha said one company identified as LRR Group will build a 117,000 barrels per day refinery near the existing Warri refinery, while a different company identified as JALEMBA will build a 100,000 bpd refinery near the present Port Harcourt refinery.
“The reality of the situation is that studies have been done and by 2025, the actual projected petrol consumption in Nigeria is estimated to be about 41 million litres per day.
“Now the three refineries at full capacity will deliver about 50 per cent of that. Dangote Refinery, I understand, will deliver about 95 per cent of that when it comes on stream.
“That is where the whole idea of becoming a net exporter of petrol is coming from – if the three refineries operate at full capacity and Dangote also comes on stream,” Kragha said.
He said the NNPC was searching for financiers with technical expertise to rehabilitate the existing refineries within the next 24 months.
“On the co-location, a 100,000-barrel per day refinery will be co-located in Port Harcourt Refinery; there is also a 117,000 barrel per day in Warri,” he added
Also speaking, Kachikwu, who was represented by a Deputy Director in charge of Engineering Standards at the Department of Petroleum Resources (DPR), Mr. Olumide Adeleke, said that the federal government was working out modalities to provide funding to promoters of modular refineries.
He identified funding as the major challenge that has hindered the take-off of the construction of the new refineries.
“On the concept of co-location of refineries, we have moved from our initial model, which involved co-locating brownfield refineries with the existing refineries to the co-location of brand new (greenfield) refineries.
“The overall concept remains the same – pipelines, jetties, and where possible, storage tanks would be jointly invested in and shared,” Kachikwu added.
Kachikwu insisted that to become net exporters of petroleum products, the existing refineries needed to operate at nameplate capacity and all private and modular refineries must contribute their quota.
“To promote local content, we need to ensure Nigerian companies participate in the process and the host communities must be taken into cognisance as they have a role to play in achieving this goal,” he said.