Scarcity of Jet AI Fuel and the Importance of Governor Obaseki's Edo Modular Refineries
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Scarcity of Jet AI Fuel and the Importance of Governor Obaseki's Edo Modular Refineries





 
As part of continued efforts to get an increased share of Nigeria’s oil and gas revenue, the Edo State Government has established Edo modular refinery and sought for a partnership with the Nigerian National Petroleum Corporation (NNPC) Limited for the refining of aviation fuel in the state. NNPC has refused to allocate crude oil to Edo modular refinery to produce aviation fuel. Edo modular refinery has the capacity to stop the importation of Jet A1 Fuel in Nigeria. Why is NNPC refusing to allocate crude oil to Edo modular refinery?

Governor Obaseki has established a modular refinery for aviation fuel and other petroleum products to service the state’s growing aviation industry and the country at large. Edo modular refinery wants to produce aviation fuel if NNPC can allocate crude oil to Edo modular refinery. Edo cannot wait for a big refinery; give crude to Edo modular refinery to refine. Edo modular refinery that has capacity to produce aviation fuel was completed more than one year ago and it is yet to commence operation.

The Minister of Aviation, Hadi Sirika has disclosed that the high cost of aviation fuel popularly known as Jet A1 fuel was a global crisis affecting countries like America, New Zealand and other developed nations, and not a peculiar situation to Nigeria.

The Minister regretted that there is no short-term solution because of the variables involved especially since it is a global problem. According to him, “energy crisis is real and it is global. Today, there is an aviation fuel problem all over the world. From America to New Zealand. It is aggravating in Nigeria because we don’t produce the product. “It’s aggravated also because the foreign exchange is scarce in Nigeria because the source of earning the foreign exchange also has dwindled.”

He stated that the Federal Government had in the past sourced 10,000 metric tonnes of Aviation Fuel for the airlines, “as we speak, the government is in the process of finding a permanent solution to this issue”. In addressing some of the challenges facing the sector, Sirika said some of the solutions include “importation of the product at an appropriate price, accelerating the refurbishment of our refineries and also wait for the coming on stream of Dangote Refinery to boost the supply of the product.

On his part, the President of AON, Alh. Abdulmunaf Yunusa Sarina explained that the aviation fuel crisis began at N180 per litre and now it is at N1000 per litre. He lamented that the Forex crisis is a huge burden on the industry. “The rate at which the dollar is escalating now is very alarming. Every day, a difference between 10-15 Naira is added to the parallel market. Last week Monday, it was N610 but today, it is N670 to one dollar,” he said.

There are two modular refineries in Edo State that are supposed to have been functional but they do not have crude oil to process. The two modular refineries in Edo State can stop the cabals that are benefitting from petrol imports in Nigeria. Edo modular refinery will reduce massive imports of aviation fuel and Premium Motor Spirit, popularly called petrol, using the United States dollar, will continue to put pressure on the naira and cause a further devaluation of the local currency.

President Buhari should encourage the completed two modular refineries in Edo State. The two modular refineries in Edo State have the capacity to end the importation of petroleum products in South-South region of Nigeria. The two modular refineries will end fuel subsidy in the South-South region of Nigeria. They will start operation very soon. We are expecting President Buhari to commission them very soon. Edo Modular Energy refinery is set to increase crude oil production from 6,000 barrels per day (bpd) to 60,000 bpd. The project will enhance fuel sufficiency in the country and reduce the sufferings of Nigerians in every facet. Projections are that some of its products will be exported to boost foreign exchange earnings and by the time it extends operations into different phases, the firm would be able to take care of more than 80 per cent of diesel requirement in Nigeria. The investment is also expected to benefit Edo people through job creation, increased revenue and ease of pressure on other refineries.


 
President Buhari should encourage modular refineries in Edo State. Secondly, even small-scale refineries should be encouraged to come up to boost the moribund refineries we have. Nigeria can even build a brand new refinery from the scratch, it will help us. We have been waiting for Dangote refinery to come on stream. But if it comes on stream, what is going to be the difference? I’m made to understand that they will also buy crude at the international rate, they will refine it and when this is done at the international rate, we may still buy it at the imported rate, except there will be some form of cost control on this.

Nigeria is depending heavily on the importation of petroleum products, all the refineries are not yet working despite several promises by government that the plants will start production. The value of the naira is depreciating daily, so what do you expect? Nigeria will continue to subsidise petroleum products and that is static at the moment and based on this, our naira will continue to be devalued, because so much dollars are just being deployed in pursuing products. The products we buy here in Nigeria are purchased in naira, and not in dollar; but we use the dollar to make payment for imported products.

I do not understand the delay in providing crude oil to Edo modular refinery to start operation. The project has been completed. I want to appeal to President Buhari to as matter of urgency provide crude oil to Edo modular refinery to enable it start operation. Edo modular refinery is ready and waiting for crude oil from Nigerian Petroleum Development Company (NPDC) facility – oil mining lease (OML) 111 NNPC to starting operation. There is no explanation from NNPC for its delay to provide crude oil to Edo modular refinery. I am appealing to President Buhari to provide crude oil to Edo modular refinery since NNPC cannot perform its function. Edo modular refinery, Ologbo is very close (OML) 111 yet it cannot get crude oil to start its production. Edo modular refinery needs crude before it becomes an abandon project because NNPC cannot give it crude oil to refine. I see it as an attempt to frustrate Governor Obaseki. Nigeria is an oil producing country yet NNPC cannot give Edo modular refinery crude to refine. It is difficult to believe that in this era of subsidy payment, NNPC cannot provide crude oil for Edo modular refinery to start operation. My special appeal to President Buhari is to give crude oil to Edo modular refinery at Ologbo to start its operation.

If President Buhari can give crude oil to Edo modular refinery now, Edo Modular refinery will increase petrol products to 60,000 bpd. The project has been developed by two Chinese firms; AIPCC Energy Limited and the Peiyang Chemical Equipment Company Limited. Governor Obaseki has developed keen interest in this project. Edo is the only state that can boast of two modular refineries that cannot get crude oil from NNPC TO REFINE. Operations have commenced and waiting for crude from President Buhari since NNPC cannot give it crude. The first phase will produce 1,000 bpd, while the second phase will produce 6,000 bpd; with a long-term goal of producing 60,000 bpd.

Phase one – which is completed – will target a production ratio comprising 55% diesel, 38% fuel oil and less than 10% naphtha. “Some of the products will be exported to boost foreign exchange earnings and by the time the refinery extends it into different phases, it would be able to take care of more than 80% of diesel requirement in Nigeria. The investment will benefit the Edo people through job creation, increased revenue and ease of pressure on other refineries.

The goal of modularization in the oil and gas market is to reduce capital costs, accelerate delivery schedules, and to efficiently minimize field construction, thereby ensuring every project is on schedule, budget, and scope. Edo modular refinery has been waiting since July, 2021 to commence operation and NNPC has refused to supply crude oil to Edo modular refinery. This is a key legacy project by the Gov. Godwin Obaseki-led administration to recalibrate the state’s industrial base, birthed through a Memorandum of Understanding (MoU). Godwin Obaseki, governor of Edo state, said in July,2021 that the modular refinery located in Ologbo, Ikpoba–Okha LGA, is ready for production. The refinery was developed by two Chinese firms: AIPCC Energy Limited and Peiyang Chemical Equipment Company Limited. It has a capacity of 6,000 barrels per day and it is expected to produce 50 percent of diesel (500,000 litres), 25 percent of naphtha (300,000 litres) and 20 percent of fuel oil (200,000 litres) from its feedstock.

With President Buhari’s instruction to DPR and the Nigerian National Petroleum Corporation, NNPC, to provide all necessary support in securing oil and condensate feedstock for the Edo modular refinery, there are expectations that the project will be a success. Edo Modular Energy refinery is set to increase crude oil production from 6,000 barrels per day (bpd) to 60,000 bpd if President Buhari can give it crude oil to refine.

I want to draw Chief Sylva antention to Edo modular refinery initiative which will promote availability of petroleum products in the country, conserve foreign exchange utilisation for the importation of petroleum products, promote socio-economic development in order to stop restiveness, criminal and illegal refinery activities thereby sustaining peaceful co-existence in the Niger Delta and mitigate environmental degradation associated with illegal refinery activities, crude oil theft and pipelines vandalism, then Nigerians are on their way to the Promised Land.

Edo modular refinery has adequate refining capacity and meet all the criteria, hence the opportunities for modular refineries because they are simple, fast to start up and usually operating at optimal capacity. In theory, this is an advantage over larger refineries. It can also commence production with a small capacity of 5,000BPSD or 10,000BPSD, and grow its capacity over time by adding more modules.

As part of its strategy to reposition the oil and gas industry, President Buhari in 2016 launched a roadmap of short and medium-term priorities aimed at developing a stable and enabling the oil and gas landscape with improved transparency, efficiency, stable investment climate and a well-protected environment tagged “7big wins”. The fourth initiative in the roadmap, “Refineries and local production capacity” seeks to transit Nigeria from being an import-dependent nation into a net exporter of refined petroleum products through the modular refineries as vehicle.

This is seen as one of the ways and means of tackling non-availability of petroleum products. This much was evidenced when President Buhari performed the virtual inauguration of the National Oil and Gas Excellence Centre on January 21, this year. One of the issues he spoke about was modular refinery.

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Inwalomhe Donald writes from Ologbo, Edo State via [email protected]


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