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NNPC targets 650,000bpd refining capacity, opens bids for co-location of plants

By on April 2, 2016

In its bid to reduce fuel importation in the foreseeable future, the Nigerian National Petroleum Corporation (NNPC) has said that nine companies have submitted bids for the co-location of new refineries within the complexes of its three existing refineries in Kaduna, Warri and Port Harcourt.

This is just at the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has clarified that he never informed the Senate Committee on Petroleum (Downstream) last Tuesday that the fuel shortages will end between April 5 and 7, but assured THISDAY in a phone conversation that concrete measures had but put in place to end them soon.

NNPC said in a statement by its spokesperson, Mr. Garuba Deen Mohammed, that the open bid exercise was a demonstration of the determination of the federal government and NNPC to increase the nation’s refining capacity from 445,000 barrels per day (bpd) to 650,000bpd.

It quoted its chief operating officer (COO) of refineries, Mr. Anibo Kragha as making this disclosure when the technical bids of the companies were opened in Abuja.

According to the statement, a technical evaluation committee has been set up to study the bids and announce winners as soon as possible.

It said the exercise was witnessed by representatives of the Nigerian Extractives Industry Transparency Initiative (NEITI) and the Bureau of Public Procurement (BPP).

Kragha, according to the statement, said the corporation was committed to boosting the nation’s refining capacity which in turn would end the perennial fuel shortages in the country.
He said: “The aim is to leverage on the existing facilities to fast track the take off of the refineries as soon as possible.”

Also, Kachikwu has waded into the lingering crisis in the Independent Petroleum Marketers Association of Nigeria (IPMAN) with the aim of ending the fuel shortages in the country.
According to NNPC, Kachikwu invited all stakeholders within the IPMAN hierarchy to his office where he raised a 14-man committee to resolve the lingering leadership crisis in the association.
He told them that IPMAN was a critical stakeholder in the downstream petroleum sector and as such should be united.

Members of the 14-man reconciliation committee set up by Kachikwu include Danladi Pasali, Dibu Aderigbe, Abubakar Maigandi, Hemmed Fashola, Leo Nkememe, Chukwudi Fred Ezinwa and Chief Ben Odjugo.
Others are Andrew Ashiga, Igwe Ezekwesili Maduaguna, Emma Ihedigbo, M. A. Shettima, Augustine Erhabor, Prince I. Dunuje and Lawson Ngoa.

They are expected to help the government monitor the distribution of petrol to their members as well as the protection of pipeline facilities in the country.

But as NNPC grapples with ending the perennial fuel shortages in the country, a report from the Natural Resource Governance Institute (NRGI), a UK-based natural resources accountability group, has shown that under President Muhammadu Buhari, the state-run oil firm has continued to withhold billions of dollars in oil revenues from the treasury.

The report titled, “NNPC Still Holds the Blank Check”, is a follow up to a 2015 report on the activities of NNPC by the NGRI and was obtained by THISDAY yesterday in Abuja.

It said the corporation still holds on to oil revenues without effective rules or oversight, adding that despite Buhari’s personal resolve to curb graft in Nigeria’s oil industry, the corporation in the second half of 2015 made up to $6.3 billion from sales of export crude, domestic crude and oil from its subsidiary the Nigerian Petroleum Development Company (NPDC), out of which only $2.1 billion was entered into the Federation Account.

According to it, the NNPC retained 66 per cent of sales proceeds from these three types of transactions. This, it noted, was 12 per cent higher than what it retained between 2013 and 2014.
It said that while the NNPC’s withholding covers known costs, notably its share of the joint venture expenditure, the corporation has however not fully explained others, especially revenues retained from NPDC and domestic crude sales.

NNPC’s spending on this scale, it said, raises questions about its adherence to fiscal responsibility, especially at a time when public finances are stretched and the government is looking for monies to fund its budget.

The report advised the government to establish a clear, legally enforceable rule governing what revenues NNPC could keep and how they can be spent now that it is undergoing some sorts of reforms.
Otherwise, it said oil sector corruption and waste could return to their prior devastating levels once Buhari leaves or crude oil prices rise again.

Meanwhile, Qatar’s oil minister has said 12 countries have agreed so far to participate in a meeting it will be hosting next month to discuss a freeze in oil output levels.
Qatar announced earlier this month that it would be the meeting venue for OPEC and non-OPEC producers on April 17to discuss the production cap.

The talks are aimed at bolstering oil prices that have fallen from over $100 a barrel in 2014 to less than $40 a barrel at present.

According to Reuters, the Minister of Energy and Industry, Mohammed Bin Saleh al-Sada, said yesterday that Qatar was still expecting official confirmation from producers that had verbally expressed plans to attend the meeting.

Those confirmed so far are Saudi Arabia, Russia, Kuwait, the United Arab Emirates, Venezuela, Nigeria, Algeria, Indonesia, Ecuador, Bahrain, Oman and Qatar.

Since the Kingdom of Saudi Arabia and Russia, the world’s two biggest oil producers, agreed to an output freeze at January levels, the price of oil recovered some of its losses from $30 a barrel to about $40 a barrel.
However, Iran has said it will not freeze oil output, as it is keen on raising production following the lifting of international sanctions after it agreed to stop its nuclear programme.

But as OPEC and non-OPEC producers prepare to meet, the United States has fast become a big importer of oil again, Bloomberg has reported.
In the three months since the U.S. lifted its 40-year ban on crude oil exports, U.S. crude shipments to foreign buyers have stalled.

At the same time, imports into the U.S. jumped to a three-year high in what looks to be a reversal of a yearslong decline in the amount of foreign crude brought into the American market.
According to the report, refineries are choosing to buy imports instead of West Texas Intermediate (WTI), an oil variant produced in the US. One of the major beneficiaries is Nigeria, which is regaining lost market share. Imports from Nigeria surged to 559,000 barrels a day in mid-March, compared with an average of 52,000 in all of 2015.

 

[ThisDay]