August 12, (THEWILL) – Operators of the Edo Refinery and Petrochemicals Company Limited (ERPCL), AIPCC Energy Limited, have raised the alarm over the persistent lack of crude despite being a fully functional 1,000 barrels per day stream crude oil refinery.
This is coming even as the management of the Dangote refinery, persistently decries the inability of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), to fully enforce the domestic crude supply obligation as specified in the Petroleum Industry Act (PIA).
Situated at Ologbo in Ikpoba-Okha local government area of Edo State, the Edo refinery lamented that despite the directive by President Bola Tinubu for the Nigerian National Petroleum Company (NNPC), Ltd to supply crude oil to Dangote Refinery and other Modular Refineries in the country in Naira denomination, it has yet to receive any from the relevant authorities.
Speaking to journalists in Benin City at the weekend, the representative of the company, Segun Okeni, said the refinery, which requires 1,000 bpd stream crude, can barely function at full installed capacity.
Okeni said that 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 addressed a letter to the Group Chief Executive Officer of NNPC, Mele Kyari, after a series of meetings and constant communication with him did not yield much fruit.
He noted that Nigeria has lost millions of dollars following the inability of the NNPC to supply modular refineries over the past three years, which have a total installed capacity of less than 30,000 bpd.
“On August 18, 2021, our team led by our chairman met with the NNPC GCEO and its top management team to discuss our intention to buy crude oil from NNPC, and we immediately wrote seeking crude supply.
“In July 2022, representatives of NNPC visited our facility for a 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 NNPC 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.
“Despite the meetings, correspondences, and communications with NNPC over the past three years on the issues of crude oil supply, nothing has been done”, he said.
Okeni also decried the inability of NNPC to assign any of the preferred fields to allocate crude to the company since it started engaging with the management on August 18, 2021. He pointed 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.
“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”, he added.
Describing the past two years as frustrating for the establishment, he said, “If we, as 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 2 percent of the daily crude oil production. Our lifting from the pumping station will even reduce pipeline losses.
“If the smallest refinery is not getting crude, it will discourage investors in that area”, Okeni said, contending that because of the lack of crude, OPAC Refinery operates at less than 3 percent of its installed capacity and Edo Refinery at less than 10 percent of its installed capacity.”
Okeni sought Kyari’s intervention as the Group GCEO of NNPC to implement the Seplat-ERPCL agreement to enable the Edo refinery to start lifting crude oil from the Oil Mining Licence (OML).
