3 months ago
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The management of AIPCC Energy Limited, operators of the Edo Refinery and Petrochemicals Company Limited (ERPCL), has raised the alarm on the persistent lack of crude oil despite being a fully functional 1,000 barrels per day stream crude oil refinery
The refinery said in spite of the disclosure by the Dangote Refinery on the refusal of the Nigerian National Petroleum Company Limited (NNPCL) and the directive by President Bola Tinubu that the establishment should supply crude oil to Dangote Refinery and other Modular Refineries in the country in Naira denomination, the Edo Refinery is yet to get any supply from the relevant authorities.
Speaking to journalists in Benin-City at the weekend, the management of the refinery, said the firm is facing significant challenges due to persistent lack of crude supply.
Representative of the company, Segun Okeni, who spoke to journalists said the refinery, which required 1,000 barrels per day stream crude can barely function at full installed capacity.
Okeni said though the company has existing crude oil supply agreements with Seplat and ND Western since 2022, bureaucratic bottlenecks have prevented the refinery from accessing the much-needed resource.
He alleged that in 2021, ERPCL’s letter addressed to the Group Chief Executive Officer of NNPCL, Mele Kyari, after series of meetings and constant communication him was ignored.
According to him, “On 18th August 2021, our team led by our chairman, met with the NNPCL CEO and its top management team to discuss our intention to buy crude oil from NNPCL and we immediately wrote seeking crude supply,” the letter was dated 22 July 2022.”
He also added, “In July 2022, the representatives of NNPC (from HQ Abuja and NPDC Benin) visited our facility for site inspection and to confirm the mechanical completion of the Edo refinery. In September 2022, we were invited for a commercial negotiation meeting with the NNPCL Head of terms, after which we sent a follow-up letter identifying the oil fields from which we can offtake crude oil.
“In March 2022, we also wrote to the Ministry of Petroleum Resources, informing it of our refinery status, future projects and our challenges of lack of crude oil supply to our refinery. We had also written and had a meeting with the NNPC Exploration and Production Limited (NEPL) between November 2022 and March 2023, indicating our severe need for crude oil supply from oil fields where NEPL has equity stakes.”
The ERPCL representative however, noted that despite these meetings, correspondences and communications with NNPCL over the past three years on the issues of crude oil supply, nothing was done.
Besides, he identified other key issues encountered by the refinery as the inability of NNPCL to assign any of the preferred fields to allocate crude to the company since it started having engagement with the management on August 18, 2021, pointing out that even with the options given to allocate crude to the refinery from ND Western, First Hydrocarbon, and Seplat, nothing happened till date.
“ERPCL also has a Crude Oil Supply Agreement with ND Western to lift crude oil from the Ughelli Pumping Station (UPS) owned by NEPL and operated by Shoreline.
“We have held several meetings with Shoreline and Heritage Oil and indicated our readiness to make modifications needed to offtake crude oil from the UPS but no progress has been made till date,” the company said.
On the way forward, ERPCL said NNPCL and other producers need to put loading infrastructure in place to allow for truck loading, decrying why Dangote would be getting 30,000bp because it opened up to the public, while smaller refineries are not being served.
He likened this to lack of respect for smaller businesses that can also grow the economy alongside the big players.
The representative of ERPCL therefore, seek the Kyari’s intervention as group CEO of NNPCL for NUIMS to give occurrence to the Seplat-ERPCL agreement to enable Edo refinery to start lifting crude oil from Oil Mining License.
Describing the past two years as frustrating for the establishment, he said, “If we local investors can’t get crude even as small as we are, how can foreign investors be encouraged to invest in the country? The total daily demand of all modular refineries is not up to two percent of the daily crude oil production. Our lifting from the pumping station will even reduce pipeline losses.”
Okeni argued that the advantage of loading from NNPCL pumping station to the expert terminal is that it costs less because the cost of pipeline export terminal charges and loss will be saved which should make the modular refineries more competitive than the offshore refineries who come to the export terminal to take the crude, thereby making cost savings to trickle down to Nigeria consumers.
“If smallest refinery is not getting crude, it will discourage investors in that area” Okeni said, contending that because of lack of crude, OPAC Refinery operates less than 3% of its installed capacity and Edo Refinery less than 10% of installed capacity.
He noted that Nigeria loses millions of dollars following the inability of NNPCL to supply modular refineries over the past three years whose total installed capacity is less than 30,000bpd.
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