Why our Refineries must work, by Onogwu

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Over the years, there have been undue export of values in the Nigerian oil and gas industry as a result of focus on revenue that accrues from the sales of oil and gas as against on developing manpower, capacity and manufacture of facilities and equipment locally to refine the crude. With massive importation of petroleum products into the country and inefficiency at the ports, demurrages, transportation, shipping, banking costs, bridging costs, laziness, greed and ineptitude-all these come together to make for the cost of subsidy on petroleum products. There have been several findings in the Nigerian oil and gas sector in the past, which include the lost “Not the Recovery” of over N3t to subsidy, the theft of 250,000 barrels/day of crude oil since 2001 till date and a lost of a total of $183m in signature bonuses paid by oil companies to the federation.

Another protracted problem in the Nigerian oil and gas industry is shortage of storage and transport facilities for petroleum products. Out of the 21 petroleum products depots across the country belonging to the NNPC, not up to 15 are working effectively, 1,120km of pipelines across the country have been sectionally vandalized leading to consistent shortage of petroleum products in an oil-producing country.

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For the sustainable growth in the petroleum sector, the federal government must not only put in place policies but ensure they are effectively implemented to bring efficiency and profitability in the refining sector. Among the world leading crude oil producing nations, Nigeria is the highest importer of petroleum products.

It may interest you to know that why countries such as Russia, South Korea, Brazil, and Egypt are refining 6,600,000barrels/day, 2,600,000barrels/day, 1,800,000barrels/day and 726,250barrels/day respectively, Nigeria’s four refineries when in full and optimum operational capacity can only refine 438,760barrels/day.

On the continent of Africa where Nigeria is the leading crude oil producer, Egypt has nine (9) petroleum refineries with Cairo Mostorod refining 142,000barrels/day, South Africa has six (6) functional refineries with least having refining capacity of 108,000barrels/day, Libya has five (5) and Algeria five (5) with Skikdad refinery refining 356,000barrels/day of crude oil. Out of the forty four (44) African refineries inspected last year, Nigeria’s four refineries are 41, 42, 43 and 44 respectively in terms of operational efficiency.

For so many reasons and from all economic analysis and indices, it is much more profitable and economically viable for Nigeria to refine locally and export petroleum products than exporting the crude with the resultant continuous importation of refined products.

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What is petroleum refinery? An oil or petroleum refinery is an industrial process plant where crude oil is processed and refined into more useful products such as petroleum Naphtha, gasoline, diesel fuel, Asphalt base, heating oil, Kerosene and liquefied petroleum gas.

An oil refinery is considered an essential part of the downstream side of the petroleum industry in many economically viable nations of the world. For example, a barrel of crude oil which is equivalent to forty two (42) gallons or one hundred and sixty eight (168) litres of crude oil depending on the density, is selling between $88 and $89 today.

When refined, a barrel of crude oil yields; 19.5 gallons or 78 litres of PMS or petrol, 9.2 gallons or 36.8 litres of AGO or Diesel fuel, 4.1 gallons or 16.4 litres of Jet oil, 2.3 gallons or 9.2 litres of DPK or Kerosene, 0.5 gallons or 2 litres of lubricants and 6.2 gallons or 24.8 litres of petrochemicals and other products.

The gain from the sale of these products doubles what you get from the direct sale of a barrel of crude oil, and more important, residue from the refinery after refining operation can be used for a range of purposes such as manufacture of CDs and DVDs plates, plastic containers, fertilizers and pesticides, food additives as well as synthetic fibres, dyes and detergents. What it means is that; if our refineries are working, industries that can make use of this residue for the production of these products would be established across the country which will definitely lead to the creation of millions job in practical. In other to reduce blazing corrupt practices in the oil sector, proper monitoring of oil pipelines, reduction in crude oil theft and creation of jobs for the endless phalanx of unemployed Nigerian youth, government must develop the political will to make our refineries work.

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This article was written in year 2014.

He said today "A barrel of crude oil when I wrote this piece was between $88 and $89 . In a spontaneous fashion, its below $23 today."

Onogwu Isah Muhammed
B.Tech.Chemical/Petroleum Technology.

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