Edo Refinery laments NNPCL's failure to supply crude oil for production

The management of AIPCC Energy Limited, operators of the Edo Refinery and Petrochemicals Company Limited (ERPCL), has raised the alarm over the persistent lack of crude despite being a fully functional 1,000 barrels per day stream crude oil refinery.

It said that despite the disclosure by the Dangote Refinery 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 receive any from the relevant authorities.

Speaking to journalists in Benin City at the weekend, the management of Edo Refinery, situated in Ologbo, Ikpoba-Okha Local Government Area (LGA) of Edo State, said it is facing significant challenges due to the persistent lack of crude oil supply.

A representative of the company, Segun Okeni, stated that the refinery, which requires 1,000 barrels per day stream crude, can barely function at full installed capacity.

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Okeni said that although 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 Mele Kyari, Group Chief Executive Officer of NNPCL, after having a series of meetings and constant communication with him, was not attended to.

He said, “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 22nd July 2024.

“In July 2022, 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 could offtake crude oil.

“In March 2022, we also wrote to the Ministry of Petroleum Resources, informing them 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, such as the inability of NNPCL to assign any of the preferred fields to allocate crude to the company since it started 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 has happened to date.

He added, “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 to date.”

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 30,000bpd because it opened up to the public, while smaller refineries are not being served, which he likened to no respect for small players who can also grow the economy alongside the big players.

The representative of ERPCL therefore sought Kyari’s intervention as Group CEO of NNPC for NUIMS to give concurrence to the Seplat-ERPCL agreement to enable Edo refinery to start lifting crude oil from Oil Mining License.

Edo modular refinery

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 the NNPCL pumping station to the export terminal is that it costs less because the cost of pipeline export terminal charges and losses 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 trickle down to Nigerian consumers.

“If the 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 at less than 3% of its installed capacity and Edo Refinery at 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.