Financial Energy Review
Crude Oil Refineries Owners Association of Nigeria, CORAN, has sent an appeal demanding from Federal Government that crude oil be sold to members in Naira.
Chairman of the Association Momoh Oyarekhua, while making the appeal explained that the emergence of modular refineries in Nigeria will be a better avenue for the production and distribution of petroleum in the country.
Speaking on ARISE NEWS, Oyarekhua, who also advocated for support from the Government as regards this venture, highlighted several areas in which the introduction of more modular refineries will help the country.
He said that the establishment of modular refineries will help to cut costs at different areas for both the country and the citizens.
Speaking on the economic benefits, he said, “Modular refineries are meant to actually be at the well end.
The importance of that is that as you produce crude from the well end, there is a process plant, and this process plant just takes the crude, processes it, and you can bring it to market. And modular refineries are not meant to be offshore, so they are meant to be on land fleet.
So, all of the marginal fleets you have on the land today and all of that, if you establish modular refineries close to them, depends on the capacity and all of that, you will refine those crude and bring them straight into the market.” He then said that the importance of this was that it ensured that the processing of crude oil will be quicker, making more products available in the market, and that local refineries will cut a lot of cost that could be pumped back into the country, which will in turn lead to cheaper petroleum products.
Oyarekhua suggested that crude oil should be sold to modular refineries in naira instead of FX, as this could make the foreign exchange rate appreciate further, saying, “We have advocated that crude needs to be sold to modular refineries in naira because when you process these products, you’re going to sell in naira, you’re selling into the Nigerian market, so our income is in naira. So, the fleet stock should also be in naira so that we don’t come and overcrowd the foreign exchange market.”
He also spoke about the recently commissioned Dangote Refinery, saying it was a different ball game entirely, as it is located in Lagos, and not close to any wells, and as such, there would have to be a lot of money spent on transportation of the crude oil, and the increase in transportation costs will create an increase in the cost of PMS. However, he reiterated, the modular refineries will be located at the site of the well, and as such, it will reduce the cost that will further be imposed upon Nigerians. “The closer it is to your market, the better it is,” he said.
Speaking on its security benefits, the Chairman said that with the use of modular refineries, crude oil did not need to be passed through the pipeline, as the crude will be immediately refined and sent into the market, which will drastically reduce oil theft in the country, and reduce the amount of money spent on security for the pipeline.
When he was asked how the modular refineries could produce petroleum products if the funds are made available to them, he spoke of his own refinery saying, “At 10,000 barrels, on a monthly basis, we’ll probably be able to produce about 14 million litres of PMS, and we’ll pull that into the country.”
He then advocated that funds, similar to gas funds, should be created by the government for modular refineries. He then said that his company had applied to the Central Bank of Nigeria (CBN) regarding such, saying, “There should be some kind of intervention fund. We have applied as a company to CBN to access the development funds, even to add a reformer within this in 2021. We did this in 2021. Till this moment, we have not even had a response from CBN.” He then said that if the government was in support of this venture, it will encourage others to build on this enterprise, therefore, impacting the Nigerian economy for the better.
