Home > Chemical > Why We Are Importing Crude Oil –Dangote Group

Why We Are Importing Crude Oil –Dangote Group

The Dangote Petroleum Refinery’s admission that it missed its August target date to commence production because it could not get crude oil from the Nigerian National Petroleum Corporation Limited reflects how Nigeria’s oil industry is being grossly mismanaged. In an interview with S&P Global Commodity Insights, an Executive Director of the Dangote Group, Devakumar Edwin, explained that it was already importing crude and would begin refining between October and November. This is another national embarrassment. Beyond its lame excuses, the NNPC must ensure that local refineries receive adequate crude supplies.

It baffles Nigerians and the rest of the world how successive administrations since 1999 entrench the country’s continued dependence on imported refined petroleum products despite being a major producer and exporter of crude. The NNPC which owns and has run aground four refineries relishes this iniquitous role despite its devastating impact on the country.

All hopes of Nigeria ending decades of prohibitive fuel imports pinned on the 650,000 barrels-per-day Dangote refinery located in Lagos now appear misplaced. Edwin said the refinery would process crude imported from Angola! More worrisome, the company will reportedly initially concentrate on diesel, and lubricants, ignoring petrol, whose prices have spiked and created further hardship for Nigerians.

At peak production, Nigeria is Africa’s largest crude producer. Relying on multiple sources, Yahoo Finance ranks her the world’s 15th top producer, and Angola 16th. Nigeria’s production currently hovers between 1.22 million barrels per day and 1.5 million bpd. It has an OPEC quota of 1.78mbpd and capacity for much higher.

NNPC has no defensible excuse not to supply the Dangote Refinery, all the established and upcoming modular refineries, as well as its own four comatose refineries in Port Harcourt (two), Warri, and Kaduna with combined capacity of 445,000 bpd. The government and the NNPC upturn the country’s comparative advantage and inflict misery on Nigerians.

Belatedly, NNPC, which owns a 20 per cent stake in the Dangote Refinery, says it will start supplying the facility crude in November.

READ ALSO  Asteroid-Mining May Be Possible With Scar-E Robot

It should immediately start supplying the modular refineries too. The Crude Oil Refinery-owners Association of Nigeria says that its member-companies are barely surviving because NNPC does not supply them crude, leaving their refineries idle.

The NNPC’s inability to supply the domestic market is linked to the decades-old industrial scale oil theft undermining Nigeria’s production capacity. The National Security Adviser, Nuhu Ribadu, said recently that Nigeria is still losing 400,000bpd to oil thieves, representing about $4 million lost daily. That is enough to meet the needs of the four moribund public refineries. NEITI said Nigeria lost N1.96 trillion to oil theft, sabotage, and production adjustment in 2021.

President Bola Tinubu should clean up this mess. Realising self-sufficiency in refined products should be adopted as a national emergency. This should be private sector-led, with the government selling the four refineries immediately in transparent, corruption-free, and cronyism-free auctions to reputable investors to attract foreign investment and foster competition in the downstream oil sector. Tinubu should halt the continued waste of public funds on futile turnaround maintenance contracts.

Surprisingly, Tinubu, like his predecessors, appears comfortable with the current absurdities. The National Bureau of Statistics said Nigeria spent N16.9 trillion importing petrol between June 2015 and October 2022. The NNPC’s crude swap arrangements for refined products gulped N2.6 trillion in 2021, NEITI reported. Subsidy on imported products cost N4.39 trillion in 2022, and N3.36 trillion in the first half of 2023. The effects on the economy are shattering.

READ ALSO  Engineer Reveals How To Develop A Career Designing For Disabilities

Other countries manage their resources and run their national oil companies more rationally. Saudi Aramco made a profit of $110 billion in 2021. Brazil’s Petrobras closed 2022 with a profit of $36 billion. Both are major crude producers as well as major refiners.

Tinubu should shrink NNPC into a holding company, and an investment subsidiary, while privatising all its midstream and downstream assets, and restrict the government to industry regulator.

Everything should be done to provide domestic refiners with crude; Tinubu should see to this.

Source: Punch

Total Views: 674 ,

Leave a Reply

Your email address will not be published. Required fields are marked *