NNPC Promises to Deliver Condensate Refineries

The Group General Manager, GreenfieldRefineries Division of the Nigerian National Petroleum Corporation, NNPC, Engr.Mohammed Sanusi Usman has assured that his division will deliver a condensate refineriesin Nigeria.

While giving reasons why refineries appear tobe huge missing links in the country’s Oil and Gas industry, Usman also explainedwhat contributes to delay in the establishment of new refineries.

He said, “After the private companies thatwere given license failed to build refineries, the government directed the IOCsthat are operating in Nigeria to partner with NNPC to build two refineries withcompletely different governance structure from the existing refineries.Specifically Shell, Chevron, ExxonMobil and Total were to partner with NNPC onone of the refineries, while Agip would partner on the other one at Brass, butalong the line, the IOCs decided that establishing refineries was not part oftheir targets, so they withdrew.”

Usman, who spoke in an interview with NNPCNews, further said that the main reason why it has been difficult for people toset up new refineries in the country has to do with liberalization of thedownstream sector. He explained that after all these private companies withdrew,government then directed the NNPC to change strategy and focus on companiesthat have interest to build refineries by bringing them in to establishrefineries at the various locations that are planned.

“It was later discovered that many of thelocal companies didn’t have the financial muscle, while the foreign onescomplained that the deregulation of the downstream was not total. They wantassurance, and even when we gave them assurance they were still wary of goingon with the projects. Most of the companies want to operate in a free marketenvironment where the price of petroleum products is determined by marketforces, where the price is not regulated.”

The Group General Manager also gave details ofthe number of Greenfield Refinery projects currently in works, sighting reasonswhy the Group needs to build condensate refineries in Nigeria.

According to Usman, Nigeria is actually losingsome volumes of crude oil. “So we decided to establish condensate refineriesand remove that component from our crude oil by adding value to it locally. Theother reason is that Nigeria problem has always been scarcity of Premium MotorSpirit (PMS). By composition, condensate is almost like PMS, all you need toturn condensate into PMS is to do some conversion and quality improvement toupgrade it.”

He further stressed that “Right now, we areworking in the collaboration with Corporate Planning and Strategy Division(CP&S) on the condensate refineries. We have completed the feasibilitystudies on them and we believe that they are projects worth pursuing. We believethat with the support of NNPC Management, we can deliver on them. The other oneis the AGIP Refinery. We will continue to support them. AGIP is an IOC; theyhave done something in the power sector-the Okpai 1. They are doing Okpai 2now. I believe that with the right incentive, with the right support AGIP willbe able to deliver a refinery in Nigeria.”

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