Like Dangote, Edo Refinery cries out over non-supply of crude oil feedstock

• Appeals for NNPCL’s intervention 

Business a.m.

AIPCC Energy Limited, operator of the Edo Refinery and Petrochemicals Company Limited (ERPCL), has raised concerns over the ongoing scarcity of crude oil, which has negatively impacted the functionality of the ERPCL, despite the refinery’s capacity to stream 1,000 barrels of crude oil per day.

The refinery lamented that despite the recent disclosure by Dangote Refinery on NNPCL’s refusal to supply crude oil and President Tinubu’s directive for NNPCL to supply local refineries, including modular refineries like ERPCL, with crude oil denominated in naira, the refinery has yet to receive any supply from the relevant authorities.

Addressing the media in Benin-City, Edo State, the management of ERPCL revealed that the company is struggling to function effectively due to an ongoing scarcity of crude oil supplies.

Speaking on behalf of the company, Segun Okeni,a senior official, expressed concern over the persistent lack of crude, which he stated has inhibited the refinery’s ability to fully utilise its 1,000 barrels per day stream capacity. 

Okeni explained that without adequate crude supplies, the company’s operations were being severely impeded, calling for urgent attention to the situation.

Okeni explained that the refinery, despite having signed crude oil supply agreements with Seplat and ND Western in 2022, has been unable to access the vital resource due to bureaucratic red tape.

He claimed that ERPCL had reached out to Mele Kyari, the group chief executive officer of NNPCL, in 2021 via a letter, following a series of meetings and constant communication, but the plea had been ignored.

According to Okeni, “On 18th August 2021, our team led by our chairman, met with the NNPCL CEO and its top management team to discuss our intention to buy crude oil from NNPCL and we immediately wrote seeking crude supply. The letter was dated 22 July 2022.”

“In July 2022, the representatives of NNPC (from HQ Abuja and NPDC Benin) visited our facility for site inspection and to confirm the mechanical completion of the Edo refinery. In September 2022, we were invited for a commercial negotiation meeting with the NNPCL Head of terms, after which we sent a follow-up letter identifying the oil fields from which we can offtake crude oil.

“In March 2022, we also wrote to the Ministry of Petroleum Resources, informing it of our refinery status, future projects and our challenges of lack of crude oil supply to our refinery. We had also written and had a meeting with the NNPC Exploration and Production Limited (NEPL) between November 2022 and March 2023, indicating our severe need for crude oil supply from oil fields where NEPL has equity stakes.”

The ERPCL representative lamented that efforts to secure crude oil supplies through meetings, letters, and other forms of communication with NNPCL over the past three years had not yielded any tangible results, as the national oil corporation seemingly continued to ignore the refinery’s persistent requests.

Okeni further elaborated on the difficulties the refinery faced, identifying another critical issue as NNPCL’s failure to assign any of the preferred crude oil fields to ERPCL, despite engaging with the national oil corporation since August 18, 2021.

He noted that despite the availability of alternative sources for crude oil supply, such as ND Western, First Hydrocarbon, and Seplat, NNPCL had not taken any action to facilitate the allocation of crude oil to ERPCL, despite repeated requests and efforts to communicate with the national oil corporation.

Okeni voiced frustration at the apparent discrepancy in treatment, with Dangote reportedly receiving 30,000 barrels per day (bpd) of crude because it had been open to the public, while smaller refineries like ERPCL were not being served. He also expressed disappointment in what he perceived to be a lack of consideration for smaller businesses in the industry, noting that these smaller players have the potential to contribute significantly to economic growth, just like the larger players.

Describing the past two years as frustrating for the establishment, he said, “If we local investors can’t get crude even as small as we are, how can foreign investors be encouraged to invest in the country? The total daily demand of all modular refineries is not up to two percent of the daily crude oil production. Our lifting from the pumping station will even reduce pipeline losses.”

Okeni highlighted the economic benefits of loading crude oil directly from NNPCL’s pumping stations, rather than using offshore export terminals. He explained that this would result in cost savings, as the expenses associated with terminal charges and pipeline losses would be eliminated, allowing for more competitive pricing and ultimately, lower costs for Nigerian consumers.

Okeni asserted that these cost savings could be shared among the country’s local refineries, making them a more attractive alternative to foreign refineries, while simultaneously boosting the economy and benefiting Nigerian citizens.

ERPCL also outlined potential solutions to the ongoing issues, suggesting that NNPCL and other crude oil producers should install loading infrastructure to allow for truck loading.