Modular refineries suffer delay on funding concerns


Nigeria’s bid to bolster its local crude refining capacity through the construction of modular refineries has run into a hitch due to a number of factors, including funding challenges and rising cases of sabotage attacks on pipelines and oil theft, according to officials familiar with the projects.

State-run Nigerian Content Development and Monitoring Board and the Nigerian Upstream Petroleum Regulatory Commission, which are jointly managing the construction of the modular refineries along with private promoters, had listed three of such facilities to come on stream by the end of December 2021, S&P Global Platts reported on Tuesday.

The facilities located in Niger Delta states of Edo, Rivers and Bayelsa with a combined capacity to refine 32,000 barrels per day of crude were at several of stages of completion in 2021.

Modular refineries are crude oil processing facilities with capacities of up to 30,000 bpd, and are being built as part of plans to curb oil theft and promote peace in the country’s main oil-producing region.

“They could not commence production as scheduled due to some operational issues,” S&P Global Platts quoted an official at the NCDMB as saying.

“Because many of the project promoters are non-producers, they needed to engage and reach agreement with producers for the supply of crude feedstock and these are yet to be finalised,” the official added.

Representatives at NUPRC said funding challenges encountered by the project owners, as well as concerns over the rising cases of pipeline breaches in the Niger Delta, halted progress work on the modular refineries.

“Even though two of the facilities scheduled to be commissioned in December [2021] were actually on test-run, but there were fears over the integrity of pipelines being vandalized almost on daily basis, which have threatened the viability of the projects,” a NUPRC official said.

The three facilities were among more than 20 licenses issued by the Nigerian government to private investors.

State-owned Nigerian National Petroleum Company Limited, in data released December 2021, said it recorded a rise in pipeline attacks, which affected crude oil deliveries to Nigeria’s Forcados, Bonny, Odudu, Brass, Yoho, Erha, Ajapa and Aje oil export terminals.

In October 2020, Nigeria’s first modular oil refinery, built by Waltersmith Petroman Oil and NCDMB, began production with an initial capacity to refine 5,000 b/d of crude.

All of Nigeria’s refineries are currently offline due to technical and operational problems.


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