Of all the federal government’s efforts at increasing domestic refining capacity, one area the present administration has achieved greater success since it took office in 2015 is that of modular refineries, Daily Trust reports.
Policy makers, investors and other industry stakeholders agree that the government has recorded greater achievements in incentivising the take-off of modular refineries, than in the planned repair of the existing refineries.
Apart from putting the conducive environment for public private investment in modular refineries, the government has also secured incentives on reduced import duty rates (customs duty waiver for the importation of modular refinery machinery, equipment and components) to encourage investment in modular refineries.
Daily Trust findings show that prior to 2015, Nigeria had only one functioning modular refinery which is the 1,000 barrels per day (bpd) Niger Delta Petroleum Resources Ltd (NDPR) refinery in Ogbelle, Rivers State.
However, since 2016/17, construction has started on at least six modular refinery sites, spurred by the new vision for the Niger Delta and a raft of policy initiatives by the federal government.
As at January 2019, about 40 licences were said to have been issued for modular refineries.
Out of this, 10 have shown progress as construction has started on at least six of them.
Statistics indicates that Nigeria currently has a 445,000 barrels a day refining capacity solely accounted for by NNPC’s four refineries. This number is however projected to rise with the coming on stream of the 650,000 barrels a day Dangote refinery and the modular refineries which, when completed, could add over 100,000 barrels a day refining capacity to the country.
The 7,000 bpd OPAC modular refinery at Kwale, Delta State, and the planned expansion that will increase crude processing capacity at the NDPR refinery to 11,000 bpd , are already at advanced stages.
Other modular refineries currently under construction are the Ikwe-Onna Refinery in Akwa Ibom; Azikel Refinery, Bayelsa; AIPCC Refinery, Edo and the Waltersmith Petroman Oil Refinery, Imo State.
The government forecasts that once these modular refineries come on stream, they should be able close the petroleum product supply-demand gap and create positive margins for the investors.
One of the modular refineries under construction, which completion is going ahead of the original schedule, is the 5000 (Phase 1) modular refinery being developed by a wholly owned Nigerian integrated energy company, Waltersmith Refining & Petrochemical Company Limited, with equity investment from the Nigerian Content Development and Monitoring Board (NCDMB).
The Minister of State for Petroleum Resources, Chief Timipre Sylva, recently visited the Waltersmith Modular Refinery located in Ohaji/Egbema LGA, Imo State to inspect ongoing works in the refinery construction which is at an advanced completion stage of over 90 per cent.
Daily Trust reports that the official ground breaking ceremony of the refinery took place on October 4, 2018, with an 18-month completion time from November 2018 to May 2020 for its Phase 1 which will deliver 5000bpd.
Phase 1 of the project is expected to create several direct and indirect jobs for the host community and contribute an estimated 271 million litres of refined products including diesel, naphtha, heavy fuel oil (HFO) and kerosene annually to the domestic market.
The ground-breaking ceremony for Phase 2 (25,000bpd) will hold in May 2020 and the product volumes, on completion, will be significantly higher and will include PMS (petrol) and Aviation Jet fuel.
Waltersmith has also sought NNPC’s support to access feedstock for the refinery on which NNPC has expressed willingness to collaborate with it.
Chief Sylva, who was accompanied during the visit by the Executive Secretary of NCDMB, Engr. Simbi K. Wabote, expressed excitement at the pace of the project, noting that “the incorporation of the modular refinery component in the existing business concerns of Waltersmith, is exactly what was envisaged by the federal government with marginal field’s allocation.”
He stated that “the overall expectation was to see indigenous Nigerian companies do well and the Waltersmith Modular Refinery is a major bright spot which has recently been incorporated into the nation’s projection for petroleum product sufficiency and availability.”
Part of the 9-point agenda for the oil sector which the minister is currently supervising to deliver in line with the Next Level Agenda of President Muhammadu Buhari, is working with private sector operators to aggressively increase domestic refining capacity.
The minister pledged commitment of the federal government in ensuring that the expected completion date and refinery operations commencement date of May 2020, is achieved.
NCDMB’s Engr. Wabote said the partnership forged with Waltersmith Petroman Oil Limited, has clearly shown the power of public-private investments, while noting also that all the necessary steps have been put in place to ensure the full realization of the objectives of the project.
The Chairman of Waltersmith Petroman Oil Limited, Mr. AbdulRazaq Isa noted that the fundamental reasons for embarking on the modular refinery included but not limited to crude loss resulting from crude handling and the cost of crude transportation from the marginal fields owned by Waltersmith.
He noted that the project owners, Waltersmith Petroman Oil Limited (70 per cent) and NCDMB (30 per cent) have worked assiduously to ensure the phase 1 delivery timeline.
