Nigeria: DPR - Moribund Facilities Limiting Domestic Refining

2 March 2021

The Department of Petroleum Resources (DPR), has said moribund oil and gas facilities across the country would limit domestic refining capacity and hinder projected benefits and revenues.

A statement from the organisation stated that DPR Director, Mr Sarki Auwalu, made the comment during a visit to a fabrication yard located at Ilase Village, Snake Island, Lagos State.

He insisted that the federal government was, however, committed to reactivating the moribund oil and gas support facilities across the country, adding that the move was part of the government's effort to increase domestic refining capacity and gas utilisation to curb unemployment and poverty in Nigeria.

Auwalu expressed dissatisfaction that the facility which was licensed to provide oil and gas service had not been operational since 2015 due to contractual issues and expressed worry that the critical equipment in the facility was currently not being utilised for the benefit of Nigeria and Nigerians.

He said: "The industry depends on facilities like this to actualise its investment because it is like a support system for the oil and gas sector. Our visit is to the edifice that we licensed and it is dormant. But we are going to make it active because we see it as an opportunity to grow the oil and gas industry.

"We have seen an opportunity we can use to support our gas utilisation, penetration and expansion programme. We have issued several licenses for modular refineries that need fabrications. We cannot allow this kind of facility to remain under-utilised."

He revealed that efforts are currently ongoing to double the contribution of the oil and gas sector to the country's Gross Domestic Product, (GDP) to about 15 per cent from the current eight per cent.

He noted that the facility, when functional, can play a significant role in supporting and driving the federal government's gas utilisation, penetration and expansion programme, stressing that because of the shutdown of the facility, some of the fabrication jobs that could be done at the facility were being shipped to China.

In his remarks, the Engineering Director, Kaztec Engineering Limited, Mike Simpson, said the facility became dormant in 2015 after its main contractor, Addax Petroleum, declared a force majeure on its operations.

Simpson said some of the unutilised equipment in the facility included a dive support vessel, pipe laying vessel and an already constructed jacket that could be used for oil and gas operations, which could be used for oil and gas operations, saying that when operational, it has the capacity for 2,000 direct employees and 7,000 indirect employees.

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