By Jemimah Wellington, JKNMedia Reporter
THE FEDERAL Executive Council (FEC) has directed the Nigerian National Petroleum Corporation (NNPC) to start selling crude oil to local refineries, including Dangote Refinery.
This move aims to stabilize refined fuel prices and the dollar-Naira exchange rate.
Under President Tinubu’s new strategy, crude oil will be sold to Dangote Refinery and other upcoming refineries in Naira.
Dangote Refinery requires 15 cargoes of crude oil each year, costing $13.5 billion.
NNPC will supply four of these cargoes.
The FEC’s plan involves selling 450,000 barrels, meant for domestic use, in Naira to Nigerian refineries, with Dangote Refinery as the first beneficiary.
The exchange rate will be fixed throughout the transaction.
Afreximbank and other Nigerian settlement banks will handle the trade between Dangote and NNPC.
The FEC says this approach eliminates the need for international letters of credit and will save the country billions in fuel import expenses.
Nigeria’s 10 Local Refineries
The Edo Refinery and Petrochemical Company, a subsidiary of AIPCC Energy, operates in two phases with capacities of 1,000 BPSD and 5,000 BPSD. Phase 1 is fully operational, while Phase 2, which will increase capacity to 12,000 BPD, is under construction and expected to commence in 2024.
Duport Midstream, situated in Edo State, is a 2,500-BPD refinery that completed construction in 2022 and began production in 2023.
Walter Smith Refinery, located in Imo State, has a capacity of 5,000 BPD. It began operations in 2020 and plans to expand its capacity to 50,000 BPD in the near future.
The OPAC Refinery in Kwale, Delta State, is a 10,000-BPD modular refinery completed in 2021. It is part of the federal government’s initiative to enhance local refining capabilities.
The Niger Delta Petroleum Refinery (Aradel) started as a 1,000 BBL/day AGO topping plant in 2010. It has since grown into a 3-train, 11,000 BBL/day modular refinery, producing various products including Automotive Gas Oil, Dual Purpose Kerosene, Marine Diesel Oil, High-Pour Fuel Oil, and Naphtha.
The Old Port-Harcourt Refinery, established in 1965, initially had a capacity of 60,000 BPD and cost Shell BP £12 million. Despite its initial success, the refinery’s output declined throughout the 1990s. In March 2021, the federal government awarded a phased repair contract to Tecnimont SPA, with mechanical completion and flare startup announced in December 2023.
Built in 1976, the Kaduna Refinery has a capacity of 110,000 BPD and cost $525 million. Over the years, it has underperformed, producing below capacity. In 2021, a $586 million turnaround maintenance contract was approved by the federal government.
The Warri Refinery and Petrochemical Company (WRPC) was commissioned in 1978 with a capacity of 125,000 BPD and an investment of around $478 million. Production has been inconsistent, with a brief increase in the early 1990s. The federal government awarded a $897 million repair contract to Saipem SPA in 2021.
The New Port-Harcourt Refinery, built in 1985 at a cost of $850 million, can refine 150,000 BPD. Although it increased Nigeria’s refining capacity to 210,000 BPD, its recent performance has significantly fallen short of its design capabilities. The refinery has rarely operated above 50% of its capacity. The $1.5 billion turnaround maintenance project awarded to Tecnimont SPA in 2021 is expected to be completed in about 44 months.
Dangote Refinery and Petrochemicals FZE, located in Lekki, Lagos State, is a 650,000-BPD refinery that cost approximately $19 billion. Commissioned in May 2023, it began refining oil in December 2023 and started supplying products to both local and international markets by May 2024.
