Investors venturing into the building of modular refineries should configure them to be capable of processing different blends of crude oil, beside Nigeria's low sulphur content premium blend. And owning their oil fields will guarantee regular supply of crude oil for their refineries.
Mr. Dolapo Oni, head, Energy Research Desk of Ecobank, said any investor venturing into modular refinery that would produce different forms of fuel, including aviation kerosene for the purpose of selling locally and for export, will face a big challenge if he is not a crude oil producer.
And Capt. Emmanuel Ihenacho, chairman, Integrated Oil and Gas Limited, has urged the federal government to reconsider its plan to revoke the licences of non-performing modular refineries, and focus on aiding them to overcome the challenges associated with fully utilising their license.
Speaking at a stakeholders’ forum in Lagos, they said the priority of the government should be optimising crude oil processing in the country and making the investment climate more clement for investors.
Oni said: “If you look at refineries that have been developed in Nigeria that are successful, it is only one – Niger Delta Petroleum Resources Limited (NDPR). They own the field and built their refinery on their field, process their own crude and produce diesel at the rate they sell,” adding that it is the only model that can work in Nigeria.
He stressed the need to build refineries that can process crude from anywhere and any type of crude. “You don’t just build refineries that can only process the Nigerian crude,” adding that: “If you are not able to get constant supply of crude, that becomes a challenge to the refinery.”
To him, one of the challenges facing the development of modular refineries in the country is sourcing for funds outside the country. He said Nigerian banks do not have much funds, and are already pressured by existing facilities to the oil and gas sector and cannot expand more.
According to him, only a few of the top banks can provide some lending to the oil and gas sector, but refinery funding is a huge challenge locally.
Ihenacho said the Department of Petroleum Resources (DPR) should be more concerned with how the operators start refining crude oil in the country and not clamping on them.
“It is not that many operators do not want to process crude oil, but they do not have the means to do it. The funds are not just there. The local banks are not ready to provide them facility. When an operator goes to the bank, the banks give excuses. Owning and operating a modular refinery can cost even up to $2 billion excluding getting a land for the project and carrying out due process on the project. At a point, the loan seekers would get frustrated by the antics of the banks, and before you know it, the licensee would abandon the idea of operating the refinery," Ihenacho said.
PIX: Capt. Emmanuel Ihenacho, chairman, Integrated Oil and Gas Limited