Abuja — The Federal Government yesterday said repairs on Kaduna and Warri refineries have been completed and it hopes to commence production of refined oil by the middle of December.

The ability of the refineries to resume oil production, however, depends on the conclusion of repairs to damaged oil pipelines, which is expected to transport crude oil to the refineries. Meanwhile, the government said the nation's oil production capacity has increased up to 2.4 million barrels per day (bpd) following the return of normalcy in the Niger Delta region.

Minister of State Petroleum Resources, Odein Ajumogobia, who spoke to correspondents at the Presidential Villa, Abuja, shortly before the commencement of the weekly Federal Executive Council meeting yesterday, said the ruptured and broken pipelines connecting both refineries are still undergoing repairs and, hopefully, by December 2009 all the repair works would have been completed.

"Kaduna and Warri have been rehabilitated and we are just trying to get crude to them. The pipelines are still bad and once the pipelines are repaired, and we are told that by the middle of December the work would have been through, so crude will now go to Warri and Kaduna ," the minister said.

He said he would personally visit the refineries for on-the-spot assessments of the work, adding, "Once the refineries are working, we will reduce our importation by about 40 per cent".

Though he could not give the actual amount of money spent on importation of fuel, he said it cost the government N45 billion a month, while the average consumption of petrol is put at about 18 million litres a day.

Reacting to a question on the possibility of the government to build new refineries, Ajumogobia said, "The government can't afford it and no private investor would want to invest when he is not sure of getting returns on his investment. That is why we are pushing for the deregulation and as soon as we deregulate the market you will see new refineries and in fact you will see increased capacity.

"Just like the Liquefied Natural Gas (LNG), you will see people who will build small refineries, say for 5,000 barrels to serve their community and so on, and there will be others who will build 500,000, one million, five million refinery capacity. Why, because they will dedicate part of it to local consumption and they will export the rest to make their money.

It is only then we can now talk about bringing the price down. We can say okay we have so much crude oil and we can dedicate it to the refineries as recovery cost."

Speaking on the nation's oil production capacity, Ajumogobia said presently Nigeria produces about 1.830 million bpd of crude oil and 614,805 of condensate, bringing the total to 2.4 million bpd.

He added that with the Organisation of Petroleum Exporting Countries (OPEC) ceiling of 1.673 million bpd plus the 614,805 of condensate, the nation's global oil production stood at 2.2 million bpd. The additional 200,000 bpd, according to him, was deferred.

The minister also blamed oil marketers for the queues noticed in some petrol stations across the country. "These people think there would be imminent hike in price so they hoard the product. The Nigerian National Petroleum Corporation has brought the fuel and people are keeping it in their backyard, it means there is no fuel in the stations. We have supplied enough to the market and some people are hoarding it so that they can make extra money.

"If we should do it now (deregulation) it means we are halving our revenue and Nigeria is relying 90 per cent on crude oil. For those who say we should just give it free, basically what we are going to do is that we are halving our budget. The budget of N3 trillion will now be N1.5 trillion".