MODULAR PETROLEUM REFINERIES IN NIGERIA, THE JOURNEY SO FAR

Id Oduok

Nigeria is a country blessed with abundance of petroleum resources. However, for decades now we have been faced with the challenge of importing the petroleum products that we use in the country due to our conventional refineries not being able to meet up with the daily domestic demand for this product. This article x-rays the effort that have been made by Nigeria and Nigerians in bringing about modular refineries to service the need for petroleum products which we use in the country. The petroleum products here refer to PMS, AGO, DPK, ATK, LPFO.

A modular petroleum refinery is a process plant for refining crude oil that is engineered and constructed on largely skid-mounted structures. Each skid contains an section of the entire process plant and through interconnecting piping the component skids are linked together to form an integrated operable process plant at the site. A modular skid unit houses a process system within a frame so that the system can be transported easily. The modular process skid offers a high level of quality control, efficient use of space and pre-delivery testing to ensure ultimate functionality. Modular refineries are usually available in capacities ranging from 1,000 to 30,000 barrels per day (bpd).  (Brickstone, 2019)

Modular mini-refineries, from simple diesel production units to more sophisticated cracking refineries are increasingly becoming a flexible and cost-effective supply option for crude producers. This is particularly true where there is a need to adapt rapidly to meet local demand. Relatively low capital cost, speed and ease of construction are some of the key advantages of a modular mini-refinery. (Brickstone, 2019)

Effort of the Government

Here, we look at what the government has done to encourage private sector engagement. The Federal Government has disclosed that about 43 refineries, including large scale and modular refineries have been licensed to refine petroleum products across the country.

The Senior Technical Adviser to Nigeria’s Petroleum Minister on Refineries and Downstream Infrastructure, Rabiu Suleiman, told The Guardian in an exclusive interview that two of the refineries (modular) would be inaugurated in the coming week in the Niger Delta region.

Suleiman, who said the plan is aimed at meeting local demand and export of petroleum products, added that some of the organisations have also been granted import waiver to enable quick take-off of the projects.
Although Nigeria is a leading producer of crude oil and gas, the country has remained the only oil producer that relies completely on the importation of refined petroleum products to meet local need.

The development has given rise to economic challenges, infrastructure shortfall, unemployment, budget deficit as well as poverty, especially as government struggles to pay subsidy on over 55 million of Premium Motor Spirit (PMS) also called petrol consumed daily, a system fraught with high-level corruption. Speaking about efforts to revamp existing refineries and bridge shortage in downstream infrastructure in line with government’s seven bigwins policy (7BigWins), Suleiman stressed that with upcoming refineries, including the Dangote Refinery, Nigeria would soon become self-sufficient and an exporter of petroleum products.
Suleiman said: “Today, we have about 43 licensed new refineries, both modular and large sized refineries. We have 250,000 barrels licensed refinery that was given to Petrolex. Another 100,000 barrels license refinery was given to a company in Port Harcourt. There are many other modular refineries being established, from 1000 to 30000 barrels capacity.

“The objective of modular refinery is to ensure that the big capital requirement, which seems to be the major reason why refineries are not established is overcome by building small size refineries.”

According to him, about 10 of the refineries have been issued authority to construct, meaning that they have already been given a licence to establish, and have been certified by the Department of Petroleum Resources (DPR).

“Two of the refineries are almost ready for commissioning any time soon.  One of them in River State is a 10,000- barrel capacity refinery made up of two modules of 5,000 each, and have reached mechanical completion stage,” Suleiman said.

He said the second; a 7,000-barrel capacity modular refinery is located in Kwale, in Delta State, adding that others are spread across the states including Imo, Nassarawa, and Lagos.

“Refineries cannot be too many in Nigeria. We want to ensure that all our crude is not exported. We want crude to be refined in Nigeria so that we can take advantage of the total value chain of crude oil conversion,” Suleiman, who currently chairs Federal Government’s zero gas flaring efforts, said.

Speaking on what government is doing to encourage investors; Suleiman said President Muhammadu Buhari recently granted approval for custom duty waivers to the three modular refineries that are in advanced stages in Rivers, Delta, and Imo states.

“It means that all the equipment that will be brought in after being vetted by the government would be brought in for free without payment of custom duty. That would save them a good amount depending on the size and complexity of the refinery.” (Jeremiah, 2019)

The Edo Refinery and Petrochemicals Limited

Early this year, The Edo Refinery and Petrochemicals Limited announced that it will soon commence operation at its 6,000 barrels per day (bpd) modular refinery before the end of the year. he project which is located at Ologbo, Ikpoba/Okha local government area, is partly sponsored by the Edo State Government and is being developed by AIPCC Energy Limited.

The company announced that the fabrication of 6,000 barrels per day (bpd) modular refinery has been completed and would be inspected by officials of the Department of Petroleum Resources (DPR) before it would be shipped to Nigeria. The Technical Director of the project, Mr. Tim Tian, disclosed that “the refinery will get its feedstock (crude) from the Nigerian Petroleum Development Company (NPDC)’s facility oil mining lease (OML) lll, near Benin City.” According to Tian, “when operational, the refinery will produce from its feedstock 50 per cent of diesel (500,000 liters), 25 per cent of naphta (300,000 liters) and 20 per cent of fuel oil (200,000) liters.”

The Edo State Government had approved the release of N700 million as redeemable preference shares (investment) in the Edo Refinery and Petrochemical Company Limited. The take-off followed series of groundwork by the State government that led to the setting up of Edo Investment Scheme Limited, a Special Purpose Vehicle (SPV) to hold N2 billion investment funds in which the Ministry of Finance Incorporation (MOFI) and the Edo State Oil and Gas Producing Areas Development Commission (EDSOGPADEC) which are to hold shares of 20 per cent and 80 per cent respectively. The project will facilitate the establishment of a fabrication yard and create basis for expertise, professionalism and further training in the oil and gas industry. (Ibileke, 2019)

Azikel Petroleum Limited

The Nigerian Content Development and Monitoring Board says it has acquired equity in the 12,000 barrels per day modular refinery being constructed by Azikel Petroleum Limited in Bayelsa State.

The NCDMB said in a statement that when completed and operational in 2021, the refinery would produce about 1.3 million litres of petrol as well as diesel, kerosene, mixed liquefied petroleum gas (cooking gas) and a small percentage of heavy fuel oil.

The board’s Executive Secretary, Mr Simbi Wabote, described the modular refinery as the second and largest being supported by the NCDMB, noting that the partnership had huge prospects in job creation, value retention, petroleum products availability and in the development of in-country capability.

He said, “The project fits perfectly with our vision to serve as a catalyst for the development of Nigeria’s oil and gas sector.”

According to him, the NCDMB is in the final stages of commencing partnership in the development of another modular refinery in Calabar, Cross River State before the end of 2019.

Wabote said, “We are proud to be part of the journey to wean off our dear country from massive importation of petroleum products.

“Our data analytics show that we can more than double the contribution of the oil sector to the Gross Domestic Product if we achieve the current growth trajectory with the refurbishment of existing refineries, completion of the Dangote refinery, and ongoing modular refineries, to bring refining to about 50 per cent of our oil production capacity from the current level of below 20 per cent.

According to him, the board’s intervention extends to gas processing and utilisation and it has progressed discussions with partners on the establishment of LPG cylinders manufacturing plant, LPG depots, and gas processing facilities.

“One of the projects of interest is the establishment of an inland LPG depot in Abuja to complement Federal Government’s LPG penetration initiative. This project is part of the gas value chain as it utilises condensate, which is one of the by-products from gas processing.”

On his part, President, Azikel Petroleum, Dr Eruani Godbless, described NCDMB’s partnership in the modular refinery project as historic, saying the board had gone beyond its role as a regulatory agency to also serve as a catalytic agent to develop the infrastructure needed to address insufficiency of refined petroleum products in the country. (Asu, 2019)

Niger Delta Petroleum Resources Refinery

The NDPR refinery is a 1,000 barrels per day topping plant located at Ogbelle, RiversState. The plant is targeted at the production of diesel for its internal consumption and the excess is sold to immediate locality. The plant receives crude oil from the flow station operated by its upstream affiliate, the Niger Delta Exploration and Production (NDEP) Company, within its marginal field. This refinery has currently been upgraded to a 10,000 barrels per day refining capacity.

From this review, it can be seen that a lot has been done to make sure Nigeria refines her crude internally by using modular refineries. Many of the companies that indicated interest could not survive to actualize the fruition of the project while a few a making great progress. So with this, it shows that there is hope for Nigeria in this direction. This is also to encourage investors, researches, and other stakeholders not to relent effort till we attain self sustainability in refining our crude internally.

Bibliography

Asu, F. (2019). NCDMB acquires equity in 12,000bpd modular refinery. Punch Newspaper.

Brickstone. (2019). Key Development Considerations - Modular Refinery Development. Proshare Intelligent Investing.

Ibileke. (2019). Edo’s 6,000 bp/d modular refinery set to begin operation. PM News Nigeria.

Jeremiah, K. (2019). Nigeria offers 43 licences for large, modular refineries. Abuja: The Guardian News Paper.