DEVELOPMENTS IN NIGERIA`S REFINERY INDUSTRY

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Engr. Abdullahi Sule.
MD / CEO
African Petroleum Plc (AP)
Speaker:
Formely: British Petroleum (BP)
AP is one of the 6 major Petroleum Marketing
Companies in Nigeria. Others are Total, Oando,
Mobil, Texaco & Con Oil.
AP is the 3rd largest with over 400 retail outlets.
TOPIC: DEVELOPMENTS IN
NIGERIA’S REFINERY INDUSTRY
Brief summary of Nigeria’s oil & gas industry:
• Population of Nigeria is over 130 million
• Oil & Gas exploration began in the early 1950s
• First commercial discovery in ‘Oloibiri’ in 1958
• Biggest exporter of crude oil in Africa
• Current daily production of crude oil is over 2.5
million barrels
• Member of the ‘Organisation of Petroleum
Exporting Countries’ (OPEC)
Oil & Gas Summary in Nigeria cont’d:
•
•
•
•
•
Four state-owned refineries
Over 5000 km of integrated pipeline network
23 strategic depots
Over 5000 retail outlets
Major Road and Marine distribution system
NIGERIA’S CRUDE OIL PROCESSING CAPACITY.
*Port Harcourt Refinery, built in 1965, with installed capacity of 35,000 bpd, was
operated and managed by SHELL-BP before ownership was passed to the Nigerian
Government in 1970.
S/N
REFINERY
DATE
COMMISSIONED
INSTALLED
CAPACITY
35,000
60,000
150,000
1*
PORT HARCOURT
PH (EXPANDED)
2
WARRI
3
KADUNA
1965
1971
1978
1980
4
PORT HARCOURT II
1989
5
TOTAL
Table 1
125,000
110,000
445,000
Source: Nigerian National Petroleum
Corporation
REFINERY FEEDSTOCK & PRODUCT
SLATE
• Mostly locally sourced crude oil – Bonny Light,
Escravos Light and Forcados Blend.
• Allocated about 300,000 bpd of crude oil at import
parity price
• Refineries product Slates:- Premium Motor Spirit
(PMS), Automotive Gas Oil (AGO), Dual Purpose
Kerosine (DPK), High Pour Fuel Oil (HPFO),
Low Pour Fuel Oil (LPFO), Liquified Petroleum
Gas (LPG), Bitumen, Base Oil, Parafin Wax and
Sulphur.
PRODUCT SLATE Cont’d:
PETROCHEMICALS:
Linear Alkyl Benzene – Kaduna
Refinery
• Polypropelene and Carbon Black –
Warri Refinery.
• Petrochemical Plants integrated with
Kaduna and Warri Refineries in 1988.
CRUDE OIL RECEIVED BY TYPE (1997 – 2002)
50000000
45000000
40000000
35000000
BARRELS
30000000
25000000
20000000
15000000
10000000
5000000
0
97
98
99
00
01
02
BONNY LIGHT
39274443.1
27377655.82
37369550.41
23900295.81
46609266.59
39632041.99
ESCRAVOS LIGHT
36381246.05
24440897.4
28170517.97
12288843.58
35689303.98
38157025.89
FORCADOS BLEND
2334753.76
603516.91
119845.43
Chart 1
Source: Nigerian National Petroleum
Corporation
85371.67
CRUDE OIL PROCESSED BY TYPE (1997 – 2002)
50000000
45000000
40000000
35000000
BARRELS
30000000
25000000
20000000
15000000
10000000
5000000
0
97
98
99
00
01
02
BONNY LIGHT
37797360.65
29152325.57
36650005.22
23821481.96
46471388.71
39812928.61
ESCRAVOS LIGHT
35477441.12
24613029.5
28962230.16
12461307.55
34954583.01
38822299.94
FORCADOS BLEND
2263975.57
538830.91
175464.22
86127.86
131421.48
Chart 2
Source: Nigerian National Petroleum
Corporation
REFINERY UTILIZATION / PERFORMANCE.
• Basic Objective:- To refine crude oil to meet local
•
•
•
•
•
•
demand and export the excess.
Pre-199, recorded above average capacity
utilization
Post 1997, poor capacity utilization - between
22.29% and 49% for period 1997 – 2002
High ratio of imported fuels
Currently supply about 25% of the 30 million
litres of PMS daily local consumption
Most of the refined gasoline is leaded
Low capacity utilization caused by: poor funding,
equipment obsolescence, inadequate maintenance
and poor management
REFINERIES CAPACITY UTILIZATION:1997 – 2002.
Chart 3
Source: Nigerian National Pertoleum
Corporation
WHITE PRODUCTS’ SUPPLIES FROM DOMESTIC REFINERIES &
IMPORTS IN ‘000 MT.
PMS
DPK
AGO
YEAR
DOM.
REF
IMPORT
TOTAL
% IMP.
CONT
DOM.
REF
IMPORT
TOTAL
%
IMP.
CONT.
DOM.
REF
IMPORT
TOTAL
% IMP.
CONT.
90
3724.53
479.93
4204.46
11.41
1928.78
297.13
2225.91
13.35
2734.31
0
2734.31
0
91
3644.45
1020.21
4664.36
21.87
1886.6
276.19
2162.8
12.77
3006.83
0
3006.83
0
92
3857.31
1517.94
5375.25
28.24
1817.74
592.02
2409.76
24.57
2854.13
40.19
2894.32
1.39
93
3561.82
1795.37
5357.19
33.51
1676.98
661.46
2338.44
28.29
2820.19
742.86
3563.05
20.85
94
2216.49
2008.36
4224.86
47.54
1067
505.47
1572.47
32.15
1862.05
269.73
2131.79
12.65
95
2691.99
1478.49
4170.48
35.45
1449.8
560
2009.8
27.86
2270.13
103.5
2373.63
4.36
96
2457.07
1925.44
4362.51
43.93
1516.33
753.35
2269.68
33.19
2105.65
357
2462.65
1.45
Table 2a
Source: Nigerian National Petroleum
Corporation
WHITE PRODUCTS’ SUPPLIES FROM DOMESTIC REFINERIES & IMPORTS
IN ‘000 MT.
PMS
DPK
AGO
YEAR
DOM. REF
IMPORT
TOTAL
% IMP.
CONT
DOM. REF
IMPORT
TOTAL
% IMP.
CONT.
DOM. REF
IMPORT
TOTAL
IMPOR
T
CONT
R.
97
2676.96
1061.86
3738.82
28.4
1466.75
0
1466.75
0
2353.22
185.3
2538.52
7.3
98
1450.73
2507.01
3957.74
63.34
1132.22
655.62
1787.84
36.67
1610.73
515.96
2126.69
24.26
99
1662.95
1987.47
3650.42
54.44
1278.7
171.48
1450.18
11.82
1814.04
465.25
2279.29
20.41
20
971.62
4144.35
5115.97
81.01
661.74
1155.4
1817.11
63.58
1048.06
1952.73
3000.79
65.07
01
2595.99
3857.09
6453.08
59.77
1627.3
460.77
2088.07
22.07
2522.39
148.93
2671.32
5.58
02
2603.39
4036.48
6639.87
60.79
1532.41
404.9
1937.31
20.9
2515.87
94.35
2610.22
3.61
Table 2b
Source: Nigerian National Petroleum
Corporation
%
% CONTRIBUTION OF IMPORTED
PRODUCT TO SUPPLIES (1999 – 2002) ‘000MT
90
80
70
60
50
40
30
20
10
0
90
91
92
93
94
95
96
97
98
99
00
01
02
PMS
11.41
21.87
28.24
33.51
47.54
35.45
43.93
28.4
63.34
54.44
81.01
59.77
60.79
DPK
AGO
13.35
12.77
24.57
28.29
32.15
27.86
33.19
0
36.67
11.82
63.58
22.07
20.9
0
0
1.39
20.85
12.65
4.36
14.5
7.3
24.26
20.41
65.07
5.58
3.61
Chart 4
Source: Nigerian Natinal Petroleum
Corporation
PETROLEUM IMPORTS (1997 – 2002)
4500000
4000000
3500000
3000000
2500000
MTs 2000000
1500000
1000000
500000
0
PMS
ATK
97
98
99
00
01
02
1061855.5
7419799.34
2507008.5
3
1987474
4144346.9
9
3857092.7
6
4036484.2
2
655619
171482
1155398.7
460765.08
404896.79
515957.97
465248
94351.36
14985
1952731.8
1 8527.91
148926.13
17404.55
DPK
AGO
LPG
Chart 5
185296.65
Source: Nigerian National Petroleum
Corporation
PETROLEUM PRODUCTS’ SALES (1997 – 2002)
700000
0
600000
0
500000
0
400000
0
barrels
`
300000
0
200000
0
100000
0
0
97
98
99
PMS
Chart 6
DPK
00
AGO
LPFO
Source: Nigerian National Petroleum
Corporation
01
HPF
O
02
CURRENT DEVELOPMENTS
• Privatisation of Refinery Industry
• License already issued to some prospective private
refinery investors
• Existing state-owned refineries already slated for
privatisation through the nation’s Bureau for
Public Enterprises
• Government, through the Bureau for Public
Enterprises (BPE) under a leading adviser, Credit
Sussie First Boston, New York, has offered for
sale 51% of each of the refineries’ shares to core
investors, while the remaining 49% shares will be
sold to the Nigerian public and refinery staff
CURRENT DEVELOPMENTS Cont’d.
• Refurbishment of existing state-owned refineries
to boost capacity utilization to 60% of local fuel
demand latest June, 2004 before their final
privatisation
• One of the licensed private refinery investors, we
learnt, has begun construction process
CONCLUSION
Sector reform in the Refinery Industry is:
• To encourage private initiative, investment,
ownership and management
• To ensure sustainable efficiency and deepened
growth in the downstream sector of the industry
• To foster human capital development and
competency
• To ensure global competitiveness through
technological advancement and proficient
management
• To dismantle the state initiated monopoly via
Nigerian National Petroleum Corporation and
open up the space for healthy local competition
CONCLUSION Cont’d.
• Government involvement in the refinery industry
and downstream sector of the oil industry
generally, is expected to be limited to policy
formulation and fiscal matters
• Non-discriminatory / open process to state-owned
facilities and infrastructures I.e. pipeline network
system, strategic storage depots before their
privatisation is expected
• Open access to local crude oil / crude oil
importation for refinning is also expected
• On going developments in the Retail Marketing
Sector of the downstream industry.
CONCLUSION Cont’d
• Government’s resolve to privatise and deregulate
the downstream sector of the oil and gas industry
could be the needed elixir for harnessing and
exploiting the vast potentials of this great nation
with with ever expanding markets.
• Attainment of sustainable efficiency will, no
doubt, infect other sectors positively for as long as
petroleum products remain relevant to industrial
and economic growth.
Thank you.
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