Modular refinery strategy back as presidency weighs petrol agony

The Nigerian presidency is contemplating a return to supporting the establishment of modular refineries mainly by small-scale operators as an option to solve the country’s obdurate petroleum agony, according to a letter from the presidency.

The aim is to use the initiative to mop up hundreds of artisanal refiners that are strewn in most parts of Nigeria’s oil region. An army of young people have engaged in the illegal business for some years now, which has caused thousands of barrels of crude oil per day to be lost from the production mainstream.

Nigeria is headed to losing more than $4 billion or N1.6 trillion this 2022 to crude oil thieves, according to a new survey on oil theft in the country.

Indication of the new zeal on the part of the federal government is an invitation extended by the presidency to Port Harcourt-based Youth & Environment Advocacy Centre (YEAC), a non-governmental organisation (NGO), which has specialised expertise in environment management.

The letter, emanating from the office of the special assistant to the president on Niger Delta affairs, Ita Enang, is inviting Port Harcourt based Youth & Environment Advocacy Centre (YEAC) to partner with the presidency on coordinating artisanal refiners.

The letter titled: “Partnership on Artisanal Refineries Operations and Environmental Management in the Niger Delta,” which arrived in Port Harcourt in the week, said the office of senior special assistant to the President on Niger Delta affairs has approved working with YEAC for a partnership which is “expected to provide the platform for the NGO to harness its mission and vision with the programmes of activities of the Office of the SSA for sustainable environmental management and economic self-reliance.”

The Muhammadu Buhari administration had at around 2017 acquiesced to wide suggestions by experts urging the federal government to curtail the burgeoning artisanal refining via a coordinated approach where they would be put into cooperative groups, get trained and provided with improved refining equipment.

Later, the government abandoned the idea, preferring to continue with its opaque oil import subsidy, running into billions of naira. By Q1 2022, N93 billion was spent by the government as subsidy on fuel import. The National Bureau of Statistics (NBS) said the amount is 44.86 percent of the amount spent on fuel import. In the same period, the government spent N1.51 trillion on fuel importation.

The Presidency now seems set to return to modular refinery. Nigeria has been unable to meet its production quota and has failed to reap from the Russia-Ukraine war-induced spike in crude oil prices around the world, due to loss of between 250,000 and 400,000 barrels of crude per day.

According to Fyneface Dumnamene, YEAC’s executive director, they also have ability to coordinate the artisanal refiners in the Niger Delta, which have existed like a hydra-headed monster, operating uncoordinated crude boiling points in the oil region’s brackish waters.

YEAC is now to partner with the presidency to provide a coordinated approach in the effort to ensure the integration of artisanal refineries operators into the mainstream refineries operation in Nigeria.

Recall that none of Nigeria’s four refineries with a combined nameplate capacity of 445,000bpd is operational for more than seven years now.

Expectations from this initiative seem to be high with a lot of positive outcomes being projected from the work that the Fyneface-led YEAC will perform. Even after its launch, the work to be led by Fyneface is expected to provide what the presidency called, “a multifaceted approach to further articulate, plan, and implement necessary strategies and programmes of activities along with other agencies or and  organisations for Nigeria to be self-sufficient in petroleum products production”.

The renewed interest of the presidency in modular refineries, especially the ones to be operated by the army of artisanal refiners in the oil region seems to counter the notion in the region that the idea had died the usual Nigerian way, despite the petroleum ministry being manned by people of the Niger Delta. This is because the modular refinery scheme has been on the cards for almost 10 years; even as the artisanal refiners in the Niger Delta had since increased in number and intensity.

Now, only YEAC may have been considered in this strategic role probably based on its pioneering work on environment management and forefront advocacy on artisanal refineries, modular refineries and for proposing the Presidential Artisanal Crude Oil Refining Development Initiative (PACORDI) which formed the basis of the federal government organising the national summit for “integration of artisanal refineries operations and modular refineries into the national economy. YEAC was thus invited in March 2021 and March 2022 as a resource group.

Expectations are that the efforts of these summits should lead to the emergence of modular refineries in the oil region owned and operated by former artisanal refiners. The gain would be two pronged: ending illegal refining and boosting supply of locally refined petroleum products.

Business A.M. was told by persons knowledgeable about the deal, that YEAC advocacy on modular refineries had led to the pronouncements by Vice President Yemi Osinbajo in 2017. This led to the establishment of Modular Refineries Multipurpose Cooperative Societies which were inaugurated to welcome licences from the federal government as promised by the vice president then in 2017.

YEAC says it expects to bring to the table its long-standing experiences as a think-tank on organised crime of crude oil theft, artisanal refining and environmental pollution mitigation mechanisms. It also expects to use both its local and international networks and partnerships, including the diplomatic community to engage all multi-stakeholders to address the issues of pipeline vandalism, crude oil theft and artisanal refining which have made it difficult for the country to transport crude oil through the Trans-Niger Delta pipeline due to massive tapping by oil thieves.