NIGERIA - Problems In The Refining Sector.

Only two of Nigeria's four oil refineries are now in operation and their throughput is less than 150,000 b/d. The two plants, at Port Harcourt, can only produce HSFO as their main units lack repairs. The other two refineries, at Kaduna and Warri, have been out of operation since early 2006 after rebels attacked pipelines. The two plants are producing about 130,000 b/d of HSFO, of which NNPC is exporting 40,000 b/d.

The two Port Harcourt plants, with a combined nominal capacity of 210,000 b/d, were privatised and a 51% stake in them was sold in late May 2007 to Blue Star Oil Services, controlled by a local tycoon close to then President Obasanjo. Blue Star also took 51% in the 110,000 b/d Kaduna refinery. It paid $721m for the two stakes (see survey of the refining sector in down6NigrRefAug6-07). But the deal collapsed subsequently as a result of protests by the unions and NNPC.

Blue Star, which demanded an immediate refund and as NNPC hesitated, in July said it would be willing to review its withdrawal if the state company failed to repair the refineries and resume their throughputs by July 2008. President Yar'Adua vowed on July 21 that Nigeria's refineries would be back at 70-80% of capacity by end-2007.

Shell's crude oils are blended into three export grades: Bonny Light, 37.6[degrees] API with 0.13% sulphur, a gasoline-rich blend also known as Nigerian Light; Bonny Medium (or Nigerian Medium) 25.7[degrees] API with 0.24% S, also rich in gasoline and diesel/gasoil; and Forcados, 30.5[degrees] API with 0.2% S, rich in diesel/gasoil. The three blends are popular among US, European and Asian refiners.

Shell has two terminals: Bonny Island and Forcados.

ExxonMobil's crude oils are blended into Qua Iboe, 37[degrees] API with 0.1% S. Its Oso condensate is a far lighter, almost sulphur-free liquid. Both are exported from ExxonMobil's Qua Iboe terminal.

Chevron's blend is Escravos, 36[degrees] API with 0.2% S. This is shipped by SBM from the Escravos terminal on the mouth of the Niger Delta. The terminal has been partly improved.

Agip has the most popular blend, Brass River, 43[degrees] API with 0.1% S. This is shipped from the Brass River terminal in the Niger Delta.

Total's JV has the Amenam light/sweet grade, plus a variety of crude oils mostly of the Bonny Medium type. But they include the Odudu grade which is similar to Bonny Light. Total exports from the offshore Odudu terminal, close to Qua Iboe and Oso.

Texaco's blend is Pennington, 38[degrees] API with very little sulphur content. This crude, which commands the highest premium, is shipped from the Pennington terminal on the Apoi offshore platform.

Among producers under PSAs, Agip exports its share of an offshore venture separate from its Brass River JV with NNPC. A joint blend of crudes is exported by Addax, a Swiss-based firm operating fields sold by Ashland, and Monipulo Petroleum which is a small local firm producing crude from an offshore platform near Antan of Addax.

Petrobras and NNPC in 2005 signed an agreement on increased co-operation. This was to include Petrobras' export of ethanol fuel from sugar cane in Brazil to Nigeria to be blended into gasoline in the west African country. This is an important development for both countries as the Brazilian ethanol is an ultra-clean fuel for motor vehicles.

Nigeria's crude oil exports in 2006 averaged 2.15m b/d. Of this total, 42% went to the US, 13% went to India, with each of France and Brazil having taken 6%. The next market was Spain, which accounted for 5% of Nigerian crude oil exports.

The other markets were Italy (4%), the Ivory Coast (3%), South Africa (3%) and Canada (3%). The remaining 15% of Nigerian crude oil exports went to the Netherlands, the American Virgin Islands, Japan, Ghana, Chile, China, Germany, Cameroon, South Korea and Portugal.