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  • Oil & Gas - News
  • Updated: February 16, 2023

Nigeria To Save N367 Billion From Refining Locally - NNPCL

Nigeria To Save N367 Billion From Refining Locally - NNPCL

Nigerian National Petroleum Company Limited (NNPCL) has announced that Nigeria will save roughly N367.2 billion a year by locally refining crude oil into Premium Motor Spirit, also known as petrol.

The Group Chief Executive Officer of NNPC, Mele Kyari, said the logistical cost associated with the supply of fuel in Nigeria would be reduced by around N17/litre if crude oil were refined into PMS.

This was also corroborated by oil merchants on Wednesday, who told our correspondent that it was past time for the Federal Government to start operating Nigeria's refineries under NNPC due to the significant advantages it would bring the nation.

NNPC provides more than 60 million litres of gasoline each day to keep Nigeria supplied with the substance. A N17/litre reduction in logistics costs equates to daily savings of N1.02 billion.

Based on this, Nigeria will save approximately N367 billion yearly once the nation begins producing gasoline domestically at the Dangote Refinery and the nation's other refineries managed by the NNPC.

The Port Harcourt and Warri refineries are expected to be operational in the first half of this year, according to Kyari, who made these remarks during a show on Nigeria Television Authority that was made accessible to our correspondent in Abuja on Wednesday.

However, he emphasised that although there would be some price increases in terms of logistics, the local refining of oil would not cause a drastic drop in the price of gasoline.

“This understanding that once you start local refining prices will crash, this is not so.

"It is very unlikely to play out that way because firstly, crude oil will continue to be the major feedstock for every refinery.

"70 per cent of your operation cost always comes from crude, as your feedstock, and this is priced at the international market.

“However, two things will change when we start local refining. It gives you the security of supply.

"Now, when you place an order, it takes you 14 days to get these (petroleum) products from Europe into our country and that can be a matter of concern.

“Any glitch with the weather, war situation, or something happens, you’ll run into trouble, but once you’re producing locally, the products become very close to you and the issue of energy security becomes much more assured.”

Secondly, he said the in-country refining of crude “reduces the logistics cost, because for you to move products from Europe to Nigeria, probably it is going to cost you about N21/litre today.”

"But when you bring it closer home, you are probably going to need N7 or N8/litre to move it from one location, all things being equal.

“So it is going to compress your price in today’s context, maybe by N17 or so, and that N17 is quite significant.

"But more than anything, it gives you the security of supply because these products will be closer.”

Speaking on the state of rehabilitation of the refineries, the NNPC boss explained that two of the facilities were on course and would be ready this year.

“We have promised this country that we will restart the fuels plant in Port Harcourt refinery in the first half of 2023 and we are very optimistic that we will do this before the end of the tenure of this President.

“We are also aligning that schedule with that of Warri refinery so that we can also start the fuels plant.

"For Kaduna, I cannot promise this because we have got Daewoo, a Korean company, to commence the turn-around maintenance. It has less challenge.

“And, of course, we will also deliver it, but definitely not within this time framework we are talking about.

"We are very hopeful that this will be delivered. And also, don’t forget that NNPC holds 20 per cent equity in the Dangote Refinery today.”

Kyari said the national oil company was also very optimistic that before the first half of this year, the Dangote Refinery would start.

“And while that is happening, the issue of imports of petroleum products into our country will be gone forever.

"We’ll actually become a net exporter of petroleum products,” he stated.

When discussing the significance of domestic crude refining, Mohammed Shuaibu, Secretary of the Independent Petroleum Marketers Association of Nigeria, Abuja-Suleja, indicated that once realised, the persistent scarcity of PMS would disappear.

“It is high time we got our refineries working. We can’t continue to produce crude without refining it here.

"Once we succeed in refining crude in Nigeria, the problem of fuel scarcity will become a thing of the past,” he told a correspondent in Abuja.

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