Nigeria committed to building new refineries - FG

Despite the low level of profitability from investing in refineries, the Federal Government has declared its commitment to attracting private sector to build new ones to refine the nation’s crude.

The out-going Executive Director, Upstream International SHELL Petroleum Development Company, Malcolm Brinded had last week said refinery business was a no-go area for it in the country, after about 70 years in operation, because it was not a viable business worldwide.
Fielding questions from State House correspondents after meeting with President Goodluck Jonathan, called at his instance to get a brief summary of the in-depth retreat and brainstorming session that lasted for two days with all the operational and technical executives of our national refineries across the entire range of the refineries, the Minister of Petroleum Resources, Diezani Alison-Madueke and GMD NNPC, Mr. Austin Oniwon, said Shell was referring to the global meltdown which had nothing to do with Nigeria.

According to Alison-Madueke, “Shell was talking on the global context because of the global downturn in the economy. Refineries all over the world are operating at a very slight profit margin at this time. That does not suppose that Nigeria will not ensure that its refineries are brought up to at least the 80-90 per cent capacity utilisation range, which is the globally accepted range. Whether we like it or not, we must improve and maintain continuous improvement in the ability to refine our own products and supply at least the higher quantum of refined products for the country’s use. That is a critical necessity and that is what we have to do. We will look at it within the global context but of course we also have to look at our own economy.”

Asked if government was considering attaching as a condition of awarding operating licence the construction of refineries, Alison-Madueke replied, “in terms of attaching conditions to giving new licenses for refineries, I don’t think that is possible, it is not commercially viable, obviously for every acreage that is allocated to be attached to a refinery. For instance if you give 25 licences, we cannot be expecting 25 refineries to be built. What we are trying to do is to rationally determine the commercial viability and the quantum of refineries that will be needed in the country over and beyond the traditional national refineries and to attract that green field investment with private equity and the least government equity involved.”

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