NNPCL Sets To Begin Importation Of Crude Oil From Saudi Arabia Or Venezuela

In a bid to ensure Nigeria’s refineries are up and running with no shortage of refined products in the country, the Nigeria National Petroleum Corporation Limited (NNPCL) has said it is exploring ways of outsourcing crude from outside the shores of the country.

According to the report, the NNPCL may start importing 100,000 barrels of crude oil per day from Saudi Arabia or Venezuela in order to run the Kaduna Refinery.

Correspondingly, due to Nigeria’s oil production constraints, ongoing crude oil exchange agreements, and other business concerns, the refineries at Dangote, Bua, and other locations could have to import roughly 1.322 million barrels of crude oil per day.

The Bua Refinery located in Akwa Ibom State will require roughly 200,000 barrels of crude oil per day starting next year, while the Dangote Refinery, which has a refining capacity of 650, 000 barrels per day, currently relies on imported crude.

Between next month and next year, NNPCL hopes to reopen its 445,000 barrel-per-day refineries; additionally, the current modular refineries will need 27,000 barrels per day.

Nigeria has been finding it difficult to maintain its output of crude oil. There is presently a 113.52 million barrel gap in the nation’s output quota set by the Organisation of Petroleum Exporting Countries (OPEC). In the first seven months of 2023, that loss alone amounted to around $8.9 billion.

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) released data indicating that, despite Nigeria’s 1.742 million barrels per day production cap from OPEC, average production has been around 1.1 million barrels.

Section 109 of the Petroleum Industry Act (PIA), which established the Domestic Crude Supply Obligation (DCSO) to ensure that domestic refineries are not starved of crude oil supply, is presently being enforced by the Nigerian Upstream Regulatory Commission through the dragging of oil producers.

Many crude oil producers are concerned about potential business challenges in such a transaction, even though the regulator is threatening to withhold export permits, fine producers $10,000, and penalise them 50% of their fiscal price for each barrel of crude oil that is not delivered to refineries.

Renowned energy analyst Dan Kunle stated that as inadequate investment is impeding daily local production, NNPCL-owned refineries may consider importing crude oil next year.

There won’t be any crude oil or gas in Nigeria as long as the Federal Government maintains its majority stake in all petroleum businesses. The industry will change after the assets are given to investors in the private sector, according to Kunle.

Prof. Wunmi Iledare, an energy economist, said it was satisfying to see the Kaduna Refinery and others come online.

He claimed that because refineries are built for specific types of crude oil and product yields, bitumen and heavy fuel for industrial use—which the Kaduna Refinery is built for—would need to be imported from Saudi Arabia and Venezuela.

(New Telegraph)