NIGERIA - Privatising of The Oil Refining Sector.
Nigeria's four state-owned refineries, with a total capacity of 445,000 b/d, are to be privatized. They have been on offer for several years. But now the federal government in Abuja has a new approach, offering upstream upstream E&P advantages to companies investing in the oil refining and electric power generation sectors. In parallel, plans for several private oil refining projects are being developed. Abuja has issued 18 private refinery licences after opening up the country's downstream sector to local and foreign investors.
President Olusegun Obasanjo on June 13 ordered security forces to destroy illegal oil refineries This is a list of oil refineries. The Oil and Gas Journal also publishes a worldwide list of refineries annually in a country-by-country tabulation that includes for each refinery: location, crude oil daily processing capacity, and the size of each process unit in the refinery. which he said had been operating in the country's south. The decision was made at a meeting with governors of the turbulent southern Niger Delta The Niger Delta, the delta of the Niger River in Nigeria, is a densely populated region sometimes called the Oil Rivers because it was once a major producer of palm oil. , where most of the country's crude oil is produced. It added that the destruction should take place immediately. The Niger Delta has been the scene of tension since March 2003, when an uprising cut off 40% of Nigeria's oil output.
Total on Aug. 5 said oil output at its onshore Obagi field had been stopped since Aug. 1 due to local unrest. The French major said it was negotiating with local communities to solve the problem and resume operations at Obagi, which produces 35,000 b/d of crude oil equivalent and 6 MCM/d of natural gas. Nigeria's oil production is frequently slowed by ethnic violence and labour unrest labour unrest (US), labor unrest n → agitation sociale
labour unrest, labor unrest n → agitazioni fpl degli operai . Total's oil and gas production in 2004 averaged 271,000 b/d of oil equivalent, mostly from offshore fields. Obagi, in the OML-58 block, is Total's only onshore field in operation in Nigeria since the company shut down its Upomami, in OML-57, where five workers were killed in 2003.
Downstream-Linked E&P Offering: The Department of Petroleum Resources (DPR DPR Department (al) Performance Report
DPR Decreto del Presidente della Repubblica (Italian Republic presidential decree)
DPR Department of Pesticide Regulation (California) ) will award licences for about 47 oil E&P blocks on Aug. 26 under the 2005 bid round linking them to downstream investments in the oil refining and power generation sectors. The DPR on Aug. 1 began issuing bid certificates to the qualified firms, including local and foreign companies, to an Aug. 26 bid conference. All 12 blocks put on offer in the deep offshore will be awarded, and six on the continental shelf will be given, together with six onshore blocks in the Niger Delta.
The DPR said 13 of the 14 fields being offered were dedicated to downstream investors. Eight companies competing for six of the latter blocks had indicated interest in the Port Harcourt Port Harcourt (här`kərt, –kôrt), city (1991 est. pop. 362,000), SE Nigeria, a deepwater port on the Bonny River in the Niger delta. and Kaduna refineries as core investors. Six companies will complete for another four oil blocks designated to promote independent power projects (IPPs). The 2005 bid round represents a major platform for Abuja to realise its ambition of raising the nation's crude oil reserves Oil reserves refer to portions of oil in place that are claimed to be recoverable under economic constraints.
Oil in the ground is not a "reserve" unless it is claimed to be economically recoverable, since as the oil is extracted, the cost of recovery increases incrementally to 40 bn barrels by 2010.
In October 2002, President Obasanjo laid the foundation stone of a $1.5 bn refining project at Tonwei. That was to be Nigeria's first private refinery. It was said the plant would have an initial capacity of 100,000 b/d and could be expanded later on to 200,000 b/d. But no progress on this has been indicated since then.
The government of Lagos state Lagos State is an administrative region of Nigeria. The smallest of Nigeria's states, Lagos State is the second most populous state after Kano State, and arguably the most economically important state of the county, has been studying the possibility of establishing a refinery. Lagos, Nigeria's biggest city with a population of about 13m, consumes more than 50% of the country's petroleum products. The refinery, if built, will serve Lagos and Nigeria's other south-western states.
The Akwa Ibom state Akwa Ibom is a state in Nigeria. It is located in the south-east of the country, lying between latitudes 4°321 and 5°331 North, and longitudes 7°251 and 8°251 East. The State is bordered on the east by Cross River State, on the west by Rivers State and Abia State, and on the South government has announced plans to build a 12,000 b/d refinery. Ventech of the US has done the designs for this. It was said in 2003 that the refinery would be built in prefabricated pre·fab·ri·cate
tr.v. pre·fab·ri·cat·ed, pre·fab·ri·cat·ing, pre·fab·ri·cates
1. To manufacture (a building or section of a building, for example) in advance, especially in standard sections that can be easily shipped and modules in the US and then shipped to Nigeria for assembly. The facility was to be located in Eket, adjacent to the Qua Iboe crude oil terminal.
The Edo state Edo State is an inland state in central southern Nigeria. Its capital is Benin City. It was formed in 1991 by the split of Bendel State into Edo and Delta State. Tourist attractions include the Emotan statue in Benin City and the Somorika hills in Akoko Edo. government has obtained approval from the federal government to build a refinery with a capacity of 50,000 b/d. It was said in 2003 this would be owned by a consortium of local petroleum marketers. The plant was to be built within the Abuja region.
In the summer of 2003, only one of the four state refineries, the 150,000 b/d plant at Port Harcourt, was in operation at about 60% of its capacity. This was a key factor to a serious fuel crisis, which began in late June and lasted until July 7, 2003, caused by a general strike. There was a similar crisis in February 2003 which coincided with a strike by oil workers; panic-buying from that strike increased demand at a time when the refineries at Port Harcourt were offline, and the country was unable to import fuel in order to cover the shortfall.
The federal government in early 2002 began inviting private companies, foreign and local, to apply for oil refining ventures. Operators were to pay a non-refundable $50,000 as an application fee, followed by a $50,000 preliminary licence fee, and then a $100,000 fee for an operating licence.
In considering applications, the then presidential advisor for petroleum Rilwanu Lukman Rilwanu Lukman was the OPEC Secretary General from 1 January 1995 to 31 December 2000. He hails from Zaria in Kaduna State of Nigeria.
Dr. Lukman is currently on the board of Afren Plc, a leading independent exploration and production company. told a news conference at Abuja that the government was to look at the location, size and type of the proposed refineries as well as the operators' sources of crude oil.
Based on the 445,000 b/d capacity of state's four plants and the way they were built, Nigeria should have had the most sophisticated oil refining sector in West Africa West Africa
A region of western Africa between the Sahara Desert and the Gulf of Guinea. It was largely controlled by colonial powers until the 20th century.
West African adj. & n. . But decades of mismanagement mis·man·age
tr.v. mis·man·aged, mis·man·ag·ing, mis·man·ag·es
To manage badly or carelessly.
mis·manage·ment n. , labour unrest, ethnic violence and sabotage have turned this sector into one of the least efficient in the OPEC OPEC: see Organization of Petroleum Exporting Countries.
in full Organization of the Petroleum Exporting Countries
Multinational organization established in 1960 to coordinate the petroleum production and export policies of its world. Combined with a poor distribution system, the result is a frequent shortage of fuels in the country, compelling the government to import refined products.
In March 2003, Chevron signed an agreement with the state-owned Nigerian National Petroleum Corp. (NNPC NNPC Nigerian National Petroleum Corporation
NNPC Nigerian National Petroleum Company ) to take over the management of the Warri and Kaduna refineries and its crude oil tanks in Delta state. NNPC was to retain ownership of the refineries. But no progress has been reported since then.
On May 19, 2003 the federal government announced plans to sell 51% in the four refineries to major oil companies operating in Nigeria. Companies said to be interested included Shell, ExxonMobil, Chevron, Total and Agip - which are the main oil producers in the country (see OMT (Object Modeling Technique) An object-oriented analysis and design method developed by James Rumbaugh. See Rational Rose.
OMT - Object Modelling Technique & Gas Market Trends of this week). The Abuja government said it will hold on to a minority interest of 49% in the four plants.
The privatisation arrangement, agreed to by the Bureau of Public Enterprises (BPE BPE
Bachelor of Physical Education ) and NNPC, had been endorsed in the previous week by the National Council on Privatisation The National Council on Privatization (NCP) is a think tank sponsored by the Nigerian government to determine the political, economic and social objectives of the privatization and commercialization of Nigeria's public enterprises. (NCP (1) (Network Control Program) See SNA and network control program.
(2) (NetWare Core Protocol) The file sharing protocol used in a NetWare network. ). President Obasanjo then ordered the sale to be commenced immediately. But subsequently the blue-collar National Union of Petroleum and Natural Gas (Nupeng) and the white-collar Petroleum and Natural Gas Senior Staff Association of Nigeria (Pengassan) stated they were opposed to the privatisation as this was to cause a loss of many jobs. Union representatives said an immediate sale of the refineries was at odds with the ongoing work of a committee set up by Vice-President and Chairman of the NCP, Atiku Abubakar, to study the problems of the downstream sector. The unions staged nationwide protests against the privatisation in September 2002.
In late June 2003 a products pipeline explosion in a rural part of the south-eastern state of Abia killed at least 105 people. The blast occurred when gasoline leaking from the damaged pipeline was ignited by a spark as locals attempted to scoop it up. Locals claimed that the pipeline, transporting fuels from Port Harcourt to the domestic market, had been leaking for up to eight months. NNPC officials said they had no knowledge of any earlier complaint, and that the explosion had been caused by thieves who had deliberately pierced the pipe.
Thieves seeking to syphon off fuel often attack oil pipelines in Nigeria. In recent years explosions have killed hundreds of looters and bystanders. When the Abia pipe began to leak it was carrying kerosine kerosene, kerosine
see paraffin (2). . But shortly before the blast, NNPC had begun pumping gasoline - more volatile. A paralysing general strike over fuel prices took hold across Nigeria on June 30, 2003. Stores and offices in Lagos were shut for fear of looting. International and domestic airline flights were stopped later as air traffic controllers joined the protest. Government offices and businesses in the capital, Abuja, the northern cities of Kano and Kaduna and the south-eastern oil city of Port Harcourt were also closed. The protest came after the government raised gasoline, kerosine and diesel prices by more than 50% on June 20. Officials said the hike was necessary to end shortages and curb smuggling smuggling, illegal transport across state or national boundaries of goods or persons liable to customs or to prohibition. Smuggling has been carried on in nearly all nations and has occasionally been adopted as an instrument of national policy, as by Great Britain of cheap fuel to neighbouring countries. Union leaders said the hike was causing great hardship for millions of Nigerians earning a dollar a day or less. Many people had died by July 7, 2003, when the strike ended and the government reduced fuel prices.
There have been several attempts to privatise the refining sector, along with the state gas utility Nigerian Gas Co. (NGC NGC New General Catalogue (of Nebulae and Star Clusters; astronomy)
NGC National Geographic Channel (TV)
NGC National Guideline Clearinghouse ) and other public enterprises. But before putting the plants up for sale, Abuja needs to invest more than $1.5 bn (mostly in foreign exchange) just to improve the refining sector. Experts have estimated that Nigeria could save more than $100m per annum Per annum
Yearly. by shutting its refineries and importing all of its product needs.
The Pipeline and Products Marketing Co. (PPMC PPMC Physician Practice Management Companies
PPMC Processor PCI Mezzanine Card
PPMC Pearson Product Moment Correlation (Coefficient)
PPMC Precambrian, Paleozoic, Mesozoic, Cenozoic (geological time scale) ), an inefficient unit of NNPC, is in charge of the local market and acts as a monopoly. It is frequently compelled to import fuels to meet local needs. With the advent of private refining ventures and a further privatisation of the retail business, PPMC's monopoly will end and gradually the market will be deregulated.
Under normal conditions, Nigeria's oil products demand exceeds 350,000 b/d. But continued refinery problems has brought actual fuel consumption down to about 330,000 b/d in the past seven years.
All fluid catalytic crackers were repaired early this year. They produce 100,000 b/d of gasoline, reducing gasoline imports to 90,000 b/d. With the market partly deregulated, diesel, jet kerosine and gasoil now are on a par with international prices; shortfalls are mainly imported by private retail firms. Union opposition prevents NNPC from phasing out gasoline subsidies, which cost the state about $1 bn per annum (see Vol. 61, No. 6).