Despite Nigeria's abundant hydrocarbon resources, she still depends on non-oil producing countries for refined petroleum products, writes Chika Amanze-Nwachuku
Nigeriaisworld's eighth-biggest oil exporter, biggest oil producer in Africa and a major supplier of crude to the United States. The country currently produces about 2.7 million barrels per day (bpd) up from about 1.3 million bpd at the behest of the crisis in the Niger Delta. But despite her being rated among 12 biggest oil producers in the world, Nigeriastill relies on fuel imports from foreign countries like The Netherlands, India and Brazil to meet local demand as the four refineries located in Warri, Kaduna and Port Harcourt, with combined capacity of 445,000 barrels per day (bpd) are underperforming notwithstanding billions of dollars expended on their routine Turn Around Maintenance (TAM).
But the fuel importation issue assumed a ridiculous dimension when a fortnight ago, fuel marketers in Katsina disclosed that they had started importing refined petroleum products from the newly-built Soraz Refinery in Zinder, Niger. The fuel imports deal, a fall out of bilateral discussions between President Goodluck Jonathan and Nigerien President, Mahamadou Issoufou, on August 9, 2010, was initially planned to commence from December 2011, but one of the marketer, Lawal Dahiru Mangal said his company, Mangal Petroleum Company commenced fuel import from Niger about four months ago. He said his company imported 90 trucks of diesel, in three batches of 30 trucks each from Soraz Refinery.
The 20,000 barrels per day (bpd) Soraz refinery was opened in November last year, following the discovery of oil in Agadem, about 700 kilometres east of its capital Niamey. The refinery, which is 60 percent-owned by China National Petroleum Corporation (CNPC), according to Nigerien President, was established to first meet Niger Republic's domestic requirements, while a huge surplus would be for exports.
History of Refineries
Although oil was discovered in commercial quantities in Oloibiri, Niger Delta in 1956, the establishment of a refinery in Nigeria dates back to 1965 after oil became commercially viable and local demand for petroleum products increased. Nigeria's first oil refinery, at Alesa Eleme near Port Harcourt, began operations in late 1965 with a capacity of 38,000 barrels per day, which was enough to meet domestic requirements at that time. The demands of a rapidly growing economy, after the civil war had prompted the government to expand the refinery capacity to 60,000 barrels per day, this however did not meet local demand. Three other refineries were subsequently constructed in Warri, Kaduna and Eleme in Port Harcourt in 1978, 1980, 1989 respectively, increasing Nigeria's refining capacity to 445,000 barrels per day, it is till date.
It is sad to note that countries without oil deposits have well functional refineries, whereas Nigeria has no functional refinery, despite her about five decades and half of commercial oil and gas production and 47 years after establishment of her first refinery.
In November 2009, the petroleum ministry had announced that Nigeria would be importing refined petroleum products from Senegal, a country without oil deposits. Although Senegal is not an oil producing country, analysts say the country is an example of a success story given her ability to refine crude into petroleum products using a fully operational refinery.
The then Minister of State for Petroleum, Odein Ajumogobia, had explained that since Nigeria allocated crude oil to Senegal, she should also benefit from the excess refining capacity of the Senegalese refinery.
It is a shame that Senegal, which is not an oil producing nation has excess refining capacity, while Nigeria, a major oil producer still imports more than 85 percent of her refined petroleum products from other countries, including Niger, a country that discovered oil, just 11 years ago.
All the four refineries have been operating far below their capacity utilisation owing to damage to pipelines that supply crude to them, mismanagement and epileptic power supply.
Investigations revealed that the refineries operated at their lowest levels between seven and 13 percent between 2007 and 2010. In March 2011, former Group Executive Director Exploration and Production, Mr. Philip Chukwu, had revealed that all the refineries were performing at only 30 percent of their installed capacity due to problem of feedstock.
Repeated calls by labour and other stakeholders that the Federal Government should fix the country's traditional four refineries to scaled down the rate of products importation and reduce expenditure on subsidy, which claimed about N1.7 trillion in 2011 fiscal year alone have fallen into deaf ears as all the plants are still in very bad shape. In June, this year, the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke had announced in far away Vienna, Austria that the era of fuel importation would end in 24 months. Alison-Madueke had noted that ending refining petroleum products importation will reduce the impact of oil volatility on the Nigerian economy.
Specifically, the minister said government would stop refined petroleum products importation within the next two years, after it was done with the turnaround maintenance, (TAM) of the existing refineries, which first phase, she said had commenced with the Port Harcourt (PH) Refinery.
She said: "At this point in time, we are trying to ensure that our refined petroleum products that are imported are produced in country within the next 24months. To do that we need to do the TAM of the refineries that we already have on ground, we have already moved into the first phase of the TAM of PH Refinery, using the original people that built them, so at the end of this year, it should be up to 90 percent capacity and by the end of 2013, Kaduna, and then Warri will follow suit."
But reports last week showed that the two refineries located in Port Harcourt have not producing since January this year due to epileptic power supply, while Warri and Kaduna refineries are producing at only about 25 percent of their installed capacities.
Criticisms trail deal
Reactions have continued to trail Nigeria's fuelimportation from Niger, with stakeholders blaming the sorry state of the refineries on neglect and mismanagement by successive administrations.
National President of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Mr. Babatunde Ogun attributed the low level of productivity of the refineries to neglect by past governments.
He noted that the delay in commencement of their TAM had plunged the country into massive fuel importation and urged the federal government to take the issue of the TAM more seriously by engaging credible firms to handle them.
But President of National Union of Petroleum and Natural Gas Workers (NUPENG), Comrade Igwe Achese, said the fact that the refineries could not function two years after the present administration came into power, meant that the government has failed woefully. The NUPENG president said the Petroleum Minister, Mrs. Diezani Alison-Madueke is not sincere about how government is implementing the reforms in the oil and gas sector. He expressed concern that from the way things are going, countries that discovered oil recently may surpass Nigeria in terms of production.
He said: "Government should be concerned about projects that will touch the lives of citizens, where this is not done, that government has failed. For me, this government has failed, the minister of petroleum has failed".
Achese noted that part of the agreement reached with NUPENG recently, which led to suspension of the recent strike was that government must make the refineries to work at optimum capacity.
He said government is not since in making the refineries to work as according to him, their TAM, which had been fixed for the first quarter of this year was shifted to the last quarter, without any genuine reason. The labour leader said there are indications that the TAM may not also take place in the last quarter of this year, but warned that if the TAM and other agreements reached with government were not strictly adhered to, the union may embark on another strike.