The Crude Oil Refinery Association of Nigeria (CORAN) Crude Shortages Challenge Refineries has raised concerns regarding the insufficient supply of crude oil to meet the production needs of modular refineries in the country. This revelation comes after multiple attempts to resolve this issue have reportedly failed, leading to operational challenges for these simplified refineries.
Crude Shortages Challenge Refineries represent a more cost-effective alternative to traditional full-scale refineries, requiring significantly lower capital investments. These facilities possess a Crude Distillation Unit, enabling them to distill crude oil into various products, including low octane naphtha, diesel, kerosene, and residual fuel oil.
Designed with daily capacities of up to 30,000 barrels, modular refineries are part of the Nigerian government’s strategy to combat oil theft and promote peace in the Niger Delta, an oil-producing region. Despite repeated assurances from the government, Nigeria’s full-scale refineries in Port Harcourt, Warri, and Kaduna, under the Nigerian National Petroleum Company Limited, have remained dormant for an extended period.
Stakeholders in the oil sector, including oil marketers, have consistently called on the Federal Government to provide necessary support to modular refinery operators, aiming to reduce the nation’s dependence on imported petroleum products. A crucial form of support is the release of adequate volumes of crude oil by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) to facilitate domestic production of refined petroleum products.
However, despite recent claims by the NUPRC that it is meeting the crude oil supply requirements of modular refineries, operators dispute this assertion. Mrs. Dolapo Kotun, Deputy Chairman of the Crude Oil Refinery Owners Association of Nigeria, stated that no clear template, framework, or process for crude oil supply and delivery had been provided to operational members, despite ongoing discussions.
In its statement last month, the NUPRC defended its crude oil supply record, stating that it had delivered significant quantities of crude oil to local refineries, meeting the relevant requirements of the Petroleum Industry Act, 2021. Nevertheless, CORAN argues that modular refineries have yet to receive the guaranteed feedstock promised at the Approval to Construct (ATC) license issuance.
As a result, modular refineries currently operate below capacity and incur daily losses. They rely on crude oil sourced from marginal fields or purchased from nearby indigenous companies with marginal fields. CORAN’s stance places the onus on the government and the NUPRC to take decisive action to rectify the situation and support the struggling industry.
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