The Group General Manager, Greenfield Refineries Division of the Nigerian National Petroleum Corporation, NNPC, Engr. Mohammed Sanusi Usman has assured that his division will deliver a condensate refineries in Nigeria.
While giving reasons why refineries appear to be huge missing links in the country’s Oil and Gas industry, Usman also explained what contributes to delay in the establishment of new refineries.
He said, “After the private companies that were given license failed to build refineries, the government directed the IOCs that are operating in Nigeria to partner with NNPC to build two refineries with completely different governance structure from the existing refineries. Specifically Shell, Chevron, ExxonMobil and Total were to partner with NNPC on one of the refineries, while Agip would partner on the other one at Brass, but along the line, the IOCs decided that establishing refineries was not part of their targets, so they withdrew.”
Usman, who spoke in an interview with NNPC News, further said that the main reason why it has been difficult for people to set up new refineries in the country has to do with liberalization of the downstream sector. He explained that after all these private companies withdrew, government then directed the NNPC to change strategy and focus on companies that have interest to build refineries by bringing them in to establish refineries at the various locations that are planned.
“It was later discovered that many of the local companies didn’t have the financial muscle, while the foreign ones complained that the deregulation of the downstream was not total. They want assurance, and even when we gave them assurance they were still wary of going on with the projects. Most of the companies want to operate in a free market environment where the price of petroleum products is determined by market forces, where the price is not regulated.”
The Group General Manager also gave details of the number of Greenfield Refinery projects currently in works, sighting reasons why the Group needs to build condensate refineries in Nigeria.
According to Usman, Nigeria is actually losing some volumes of crude oil. “So we decided to establish condensate refineries and remove that component from our crude oil by adding value to it locally. The other reason is that Nigeria problem has always been scarcity of Premium Motor Spirit (PMS). By composition, condensate is almost like PMS, all you need to turn condensate into PMS is to do some conversion and quality improvement to upgrade it.”
He further stressed that “Right now, we are working in the collaboration with Corporate Planning and Strategy Division (CP&S) on the condensate refineries. We have completed the feasibility studies on them and we believe that they are projects worth pursuing. We believe that with the support of NNPC Management, we can deliver on them. The other one is the AGIP Refinery. We will continue to support them. AGIP is an IOC; they have done something in the power sector-the Okpai 1. They are doing Okpai 2 now. I believe that with the right incentive, with the right support AGIP will be able to deliver a refinery in Nigeria.”
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