Nigeria needs to grow local refining capacity to 1.52million barrels per stream daily (BPSD) to meet the need of premium motor spirit (PMS), the Nigerian National Petroleum Corporation (NNPC) has said.
Its Group Managing Director (GMD), Dr Maikanti Baru, said the state-run oil firm planned to bridge the 20million litre per day PMS shortfall in refining capacity.
Baru said: “Nigeria needs a refining capacity of 1.52million Barrel Per Stream Day (BPSD) of crude oil in order to meet its PMS requirement by 2025.
“This capacity requirement includes Dangote’s 650,000 BPSD Refinery and NNPC’s current nameplate capacity of 445,000 BPSD (WRPC, KRPC and PHRC). This leaves a shortfall of 20million litres which is equivalent to 427,000BPSD.”
In a presentation titled: The roadmap for energy sustainability in Nigeria at the Society of Petroleum Engineers (SPE) Oloibiri Lecture Series and Energy Forum 2019 in Abuja, Baru, however, explained that in order to address this shortfall in PMS demand, NNPC is adding 215,000 BPSD of refining capacity through private sector driven co-location of existing facilities in Port Harcourt Refinery Company (PHRC-100,000 (BSPD) and Warri Refining and Petrochemicals Company (WRPC-115,000 BPSD).
“Additionally, NNPC through its new initiative of establishing condensate refineries with private sector participation is providing clusters for in-country refining capacity totalling about 250,000BSPD, which closes the PMS supply-demand gap and creates positive margins to the investors.
“These improved in-country refining capacity plan ensures Nigeria’s domestic crude oil utilisation of up to 66 per cent with its attendant local,”the NNPC chief said.
He said the country is the largest economy in Africa and dominant in the West African sub-region with an increasing energy demand.
According to him, based on available forecast, the country’s real gross domestic product (GDP) was $320 billion as at 2015 with a growth potential of $476billion by 2025 (averaging four per cent per year).
He said local petroleum product demand is expected to grow from 13.2 million metric tons in 2015, 15.1 million metric tons in 2020 and 17.3 million metric tons by 2025 while the population growth corresponding to this demand was 182 million in 2015.
For 2020, it is 207 million and 234 million in 2025 while average population growth rate is three per cent per annum.
He recalled that evolving new funding mechanisms for the Joint Venture (JV) operations was part of the focus of the reforms undertaken by the government to eliminate the often difficult cash call regime, enhance efficiency of the management of oil and gas resources and guarantee growth.
He said to encourage players in the industry, particularly “our traditional JV partners, we undertook to settle all outstanding cash call arrears amounting to a negotiated sum of a little over $5billion.
This has restored confidence in the oil and gas industry. We have signed third party financing deals with several international and local banks on new oil and gas developments worth over $3billion despite the depression in 2016/2017. This demonstrates the faith in our industry and the potential we can unlock.
“For our IOC partners, we would continue to leverage the strong credit rating of partners, identify key quick-win projects that are easy to mature with strong cash flow projections and attract the necessary funding from the capital market.
“These alternative financing approaches to fund NNPC’s JV obligations have helped to renew investors’ confidence and stimulate further Foreign Direct Investments. In particular, this has deepened local banks participation in financing the Upstream Sector as the financing are syndicated from local banks and international lenders.”
SOURCE: oglinks.news