Energy
Dangote Refinery: Inauguration will not translate to immediate production of petroleum products — Experts
The ceremony around the planned visit by the Nigerian President to the Dangote Refinery on May 22, 2023, will peak with a cutting of the ribbon, inaugurating the 650,000 Barrels per stream Day Plant, located in the Eastern flank of Lagos, the country’s commercial city.
Everyone, it seems, is looking forward to the production of petroleum products from the plant after that symbolic activity but it will not happen.
As President Muhammadu Buhari leaves office a week after commissioning one of the largest single train hydrocarbon processing plants on the planet, he could be forgiven for believing he had had his wish to be in such a large place but technology does not sit well with politics.
The ongoing technical commissioning process has not gotten anywhere close to the point of introducing raw hydrocarbon into the plant, let alone delivering petroleum products.
One key challenge of Nigeria’s chattering classes is that they hardly look up the regulation. Hydrocarbon will be introduced only when the Nigerian Midstream Downstream Regulatory Agency (NMDPRA) approves and issues Licence To Operate the Refinery to Dangote.
Speculations about inauguration and commissioning are just, well, speculations. Both words do not appear anywhere in the Procedure to License a Refinery in the Nigerian law.
The three stages are License to establish a Refinery, approval to construct Refinery, License to Operate the Refinery and inauguration or commissioning do not appear close.
So the Refinery can be inaugurated or commissioned as the Licensee desires, as long as no attempt is made to operate the Refinery by introducing crude oil and make products for sale, it does not concern NMDPRA.
The claim that some “large sub-sea pipeline infrastructure connected to Oil and Gas blocks in the Niger Delta region for supply of crude feedstock” is a false narrative. What’s in the plan is that Single Point Mooring (SPM) buoys will play the transportation role in input crude delivery and output petroleum products.
We live in a society where optics trumps everything. Buhari has been president for 8 of the 9 years that the Refinery project has been on. What is wrong with Dangote asking the President to inaugurate the Refinery so his name is on the marble when the Refinery becomes fully operational? After all no law will be breached by such gesture?
That said, Aliko Dangote the billionaire owner of the Refinery is determined that the 19billion-dollar project, the second of his three, hydrocarbon processing mega projects (Fertilizer, Refinery and Petrochemicals) is delivered by end of 2023.
The technical work has gone far, involving trial-running every single equipment, which has taken a while because of the lengthy time of construction. Some equipment were installed six years ago, and were just standing there in the air, water or even underground. Anything, literally could have happened.
As of February 2021, the installation of the Crude Distillation equipment had been completed. So had the kitting up of the Residue Fluid Catalytic Cracking Unit (RFCCU).
Supply chain challenges thrown up by the COVID-19 did slow down work, but the construction of Africa’s largest hydrocarbon processing factory picked up steam again in mid-2021.
“The electrical and instrumentation works are usually invisible to the gaze of non-refinery workers, but they are key. Their installation needed extreme care and it consumes over 30 per cent of the Refinery construction time,” say several managers familiar with the project.
“A lot of our contractors are Chinese. Those who went home couldn’t come back quickly, but the project workflow recovered and those installations especially that of the Crude Distillation Column, which arrived Nigeria in December 2019 were expedited.
“We will have 15 process units in the Refinery and they must all work together,” the managers tell us.
The operations planning will emphasise the mantra at the commissioning: we must flow everything out with air, then do it with water, then with steam, then with air again.” This is all to ensure that the likelihood of moisture absorption is zero, as the contrary will lead to cracks.
“The equipment must be pickled. What that does is that it oxidizes the facility.” The Dangote Refinery is significantly an Indian supervised operation.
But a significant percentage of the 1,000 Nigerian engineers sent to training in India for the eventual operations of the facility, have returned and are currently engaged on site.
The relationship between the Nigerian crude oil refining sector and Indian engineering expertise goes back to 1988, when the second (larger) refinery in Port Harcourt, the major city in the country’s oil producing Delta region was being constructed.
“Some of the experts working on Operations Planning were part of the construction of the Port Harcourt Refinery 35 years ago.”
Mr Dangote initially announced the likelihood of the project in 2013. But it was at the All-Convention Luncheon at the Annual Conference of the Nigerian Association of Petroleum Explorationists NAPE, in November 2014 that he provided the first relatively comprehensive details of the facility. He told the roomful of geoscientists that the capacity had increased from 500,000 BSPD to 650,000 BSPD.
Dangote Industries was advised by Jacobs Engineering and it licensed the Honeywell UOP for the basic engineering design. On a daily basis, the facility will have the capacity to produce 59million litres of gasoline, 20million litres of kerosene and 9million litres of diesel and others.
The construction has taken a while and has been the most excruciating economic challenge Nigeria has ever faced. Would Dangote Industries have delivered this project much earlier if it had awarded it to a world-class EPC contractor like Bechtel, TechnipFMC, Siemens, KBR?
“Yes,” said Alex Ogedengbe, a retired Group Executive Director at NNPC who was involved in the construction of the Warri and Port Harcourt Refineries in the 1980s. “There are just about six or seven such EPC contractors in the world,” he explained. Mr Ogedengbe was speaking at a private webinar organised by oil and gas analyst, Ronke Onodeko in April 2020.
One more advantage of building it yourself: all the equipment you purchase for logistics and construction purposes are yours.
Mr Tayo Aduloju, the Chief Executive Officer (CEO), Nigerian Economic Summit Group (NESG), says with targeted approaches, Nigeria can still meet some of the Sustainable Development Goals (SDGs) indicators.
Aduloju said this on Friday in Abuja, at a news conference to announce the Policy Innovation Center’s (PIC) annual Gender and Inclusion Summit.
According to him, though Nigeria is not on course to meet the SDGs target set for 2030, there are few indicators it can reach because as there are 17 SDGs with 169 targets and indicators.
“I would say right now we are not on course to reach anyone, but we can still achieve some milestone going forward.
“For example, we can turn around birth registration in 12 months; there are a few other indicators that I think Nigeria can reach.
“We have recommended a mother and child compact between the Federal Government and the Minister of Health and Social Welfare seems willing to push it.
“This is because we think that if we met those ones, some of the SDGs will be met automatically,” he added.
According to Aduloju, there is a parallel relationship between multi-dimensional poverty and gender inequality, with countries performing poorly on the Global Gender Report also exhibiting high severe multi-dimensional poverty.
He said that multi-dimensional poverty encompasses deprivations in health, education and living standards.
“The World Bank points out significant gender disparities in labour participation in Nigeria, with about 65.5 per cent of men participating compared to around 52.1 per cent of women.
“The National Bureau of Statistics indicates that about two-thirds of Nigerians are multi-dimensionally poor, lacking income and basic amenities like healthcare, education, and clean cooking fuels,” he said.
He added that conflict, climate change, inflation, and increasing food prices were among the pathways contributing to the rise in high food insecurity and malnutrition rates.
He, however, said that the solution remains a collective effort by all stakeholders to tackle the issues as it could no longer be achieved by government alone.
On her part, the Executive Director, PIC, Mrs Osasuyi Dirisu, said that Nigeria was facing unprecedented times owing to a weak and non-inclusive economy, volatile macro-economic environment, security challenges and weak economic competitiveness.
She, however, said that addressing poverty in Nigeria could not be business as usual.
“Ending poverty and reducing inequality are part of the SDGs and a wide range of approaches have been identified to reduce poverty and inequities.
“To design effective poverty reduction programs, it is important to understand pathways to poverty, evidence based approaches that work and linkages to multi-sectorial inequities.
“We need to identify what works for poverty reduction in Nigeria and sustain the commitment to poverty reduction by intentionally designing and implementing contextually relevant solutions driven by a policy enabling environment,” Dirisu said.
Speaking about the summit, she said that it would hold from Sept. 4 to Sept. 5 with “Reimagining Gender-Inclusive Pathways and Partnerships for Poverty Reduction” as theme.
She said that the summit was expected to explore the impacts of multi-dimensional deprivations on health, education, livelihood, and living standards.
Conceptualised in 2022, the summit is an annual event to provide an inclusive platform to explore transformative ways to advance gender equity, inclusion and gender-responsive governance in Africa.
The 2024 summit is expected to leverage the collective power of government, development partners, civil society, academia, and the private sector, highlighting the importance of strategic partnerships for inclusive development.
PIC, an initiative of NESG is an institutionalised behavioural initiative in Africa supporting the delivery of better policies and innovative solutions for social impact.
Chevron Nigeria Ltd. has restated commitment to its partnership with Nigeria in ensuring safe, reliable, and efficient operations in the country.
Chevron’s General Manager, Policy, Government and Public Affairs, Mr Esimaje Brikinn, made this known in a statement on Friday.
Brikinn said also that the company remained committed to delivering affordable, reliable, ever cleaner energy supply that was critical to the development of the Nigerian economy.
“At Chevron, we believe oil and gas will remain a viable component of the energy mix.
“The company believes that the future of energy is lower carbon even as it continues to add incremental volumes to its oil production, and support gas development in a clean manner, “ he said.
The manager said that over the years, Chevron had encouraged the participation of Nigerian companies in the oil and gas industry.
He said that the company, working with the Nigerian Content Development and Monitoring Board, continued to foster competence and competitiveness among Nigerian indigenous contractors and suppliers.
According to him, the company does this by adopting the participatory-partnership model.
“Chevron Nigeria believes that by investing in local communities, we can create a sustainable future for all.
“Our local content strategy is focused on three key pillars: capacity building (training, mentoring among others), local procurement, and social investment (community development projects mainly in health, education and economic development), “ he said.
Recently , the company was awarded the Best Exhibitor award at the 2024 edition of the Nigerian Oil and Gas Energy Week conferences and exhibition held on July 3 in Abuja.
Nigeria’s debt to petrol traders has surpassed $6 billion, doubling since early April, as the state oil firm, Nigerian National Petroleum Corporation (NNPC), struggles to cover the gap between fixed pump prices and international fuel costs, according to six industry sources.
This is according to a report by Reuters on Thursday, which tracks data on international petrol prices.
Sources confirmed to the American media outlet that NNPC has capped the pump prices of petrol shortly after the removal of subsidy in May 29, 2023.
The cap on fuel prices has resulted in stability at the pump despite increases in international crude oil prices and the devaluation of the naira against the dollar.
This situation has led many to speculate that the government might have reinstated some form of petrol subsidy, given the discrepancy between market prices and the steady price of the commodity.
According to data from Reuters, NNPC began facing difficulties early this year when late gasoline payments exceeded $3 billion.
The company has yet to pay for some January imports, with traders stating that the late payments now amount to between $4 billion and $5 billion.
Under the terms of their contracts, NNPC is required to pay within 90 days of delivery.
“The only reason traders are putting up with it is the $250,000 a month (per cargo) for late payment compensation,” one industry source said.
At least two suppliers have already stopped participating in recent tenders after reaching their self-imposed debt exposure limits to Nigeria, the sources said.
This means they will not send more gasoline until they receive payments.
The tension to reconcile the international landing cost of petrol and the fixed price of N617 has deepened the debt of NNPC to the traders, the sources confirmed.
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