October 22, (THEWILL) – Oil and gas experts have faulted the recent declaration by the group managing director of the Nigerian National Petroleum Company (NNPC) Limited, Mele Kyari, that Nigeria will become a net exporter of petroleum products by 2024.
Speaking at the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) Energy and Labour Summit 2023 in Abuja on October 9, Kyari said as a resource-dependent country, Nigeria should not be exporting 100 percent of its crude as it does at present.
“Today, we export 100 per cent of our productions, no resource-dependent country does this and that is why we must deliver on our mandate. I don’t want to speak about it; when it is done, you will see it.
“So, I don’t want to tell you we are going to revamp our refineries. That is too much of PowerPoint talks. So, it will be done and you will see it. I don’t want to speak about it, we are tired of speaking about it.
“But what we must achieve is that this country must be a net exporter of petroleum products and this is within sight,” Kyari said.
Industry experts who spoke to THEWILL lampooned the NNPC GMD for making bogus claims without basis for their realisation. They observed that Kyari has become known for such declarations which are at variance with realities and unbecoming of a public officer of his position.
An oil and gas expert, Bala Zaka, wondered how the GMD expects to achieve the feat of Nigeria becoming a net exporter of petroleum products in a year’s time when the industry is entangled with various structural and environmental challenges.
For a national oil company that is reeling on the throes of oil theft, dormant refineries, dwindling investment, inconsistent policy frameworks, to become a net exporter of petroleum products in 2024 does not add up. “It’s all paperwork. Countless number of such fake promises have been made in the past,” Bala said.
Another expert, Ibilola Amao said. “I don’t believe it. Happy to be proved wrong.”
An oil service operator, Engr Abraham Mbonu, advised Kyari to stop projecting the national oil company “into bogus, unrealistic future” recalling various declarations of the NNPC’s boss that ended up enriching the vocabulary as a hoax.
These include the declaration in May 2023 that NNPCL was ready to commence supply of crude to Dangote Refinery – when the facility was not ready for production.
While delivering his address at the Nigeria Oil and Gas Opportunity Fair held at the Nigerian Content Development and Monitoring Board (NCDMB) Conference Centre, Bayelsa, with the theme ‘The oil and gas industries: Catalyst and fuel for the industrialisation of Nigeria’.Kyari said NNPC was ready to supply 300,000 barrels of crude oil to the Dangote Refinery to begin operations.
“The NNPC saw the strategic interest of doing business, and we will be supplying 300,000 barrels of Nigerian crude to Dangote Refinery from NNPC. That is a marketing opportunity.”
Mbonu said, “It has been five months since Kyari told the world that NNPC was ready to begin crude supply to Dangote refinery in July 2023. We are now in October and the crude is yet to flow. He was in the position to know that the target was not realisable.”
THEWILL recalls that Kyari, had assured Nigerians of the company’s resolve to complete the rehabilitation of Port Harcourt Refinery by March, 2023, which did not happen.
“The promise was to start the fuel plant, which is the 60,000 bpd component of this activity by the last quarter of 2022, but it is not practical. So, we will start it off in the first quarter of 2023, otherwise every other process is going on,” Kyari stated this while giving an update on the Port Harcourt refineries during the ministry of petroleum resources 2022 scorecard in Abuja.
Again, the NNPCL had in July 2022 disclosed that Nigeria will no longer import refined petroleum products from mid-2023.This was based on the expected completion of ongoing maintenance of the nation’s refineries and the almost completed Dangote platform.
Kyari, who made the disclosure during the weekly ministerial media briefing, also lamented the phenomenon of oil theft bedeviling the society. According to him, Nigeria lost about $10 billion in oil theft as of 2022.
Apparently, based on the assurance of Kyari and his team, President Bola Tinubu had assured Nigerians that the Port Harcourt Refinery will resume production in December 2023. Recent reports indicate that this might not be achieved due to some critical issues concerning spares, materials and the communities.
On June 1, 2023, Reuters reported that “Nigeria’s state owned oil company NNPC will soon end its monopoly on petrol supplies, its chief executive told local television on Thursday, a day after it nearly tripled prices at its fuel stations countrywide.
“Mele Kyari told Arise TV that prices were expected to come down once new companies started supplying petrol, bringing more competition.
“All we did was to set variable prices depending on our costs by location and knowing full well that NNPC is the single supplier of the market and we are seeing that exit coming very, very quickly.
“There will be no monopoly, NNPC will not continue being supplier of this product alone’,” Reuters said.
Kyari later stated that none of the importers licensed to bring in petrol have the capacity to do that. “None of them (fuel companies) can do it today. For them, access to foreign exchange (FX) is difficult. We create FX, therefore we have access to FX and their access to FX is limited” — altering Kyari’s import liberalisation theory.
NNPC’s long shadows
The phantom declarations manifested in unrealised projects that litter the length and breadth of the behemoth national oil company.
Senator Karimi Steve (APC, Kogi West) at the Senate’s plenary.on July 5, 2023, moved a motion for an ad-hoc committee to investigate all contracts awarded for the rehabilitation of the federal government-owned refineries between 2010 and 2023.
He stated that the Nigerian government had spent N11.35 trillion on the renovation of refineries from 2010 till date.
He also said the federal government had spent over N6 trillion between 2010 and 2020 on fuel subsidy due to Nigeria’s low refining capacity, and almost twice the amount had been spent on rehabilitating refineries in Port Harcourt, Kaduna and Warri between the same period under review.
The Kogi senator noted that despite the moribund condition, the operating cost of the federal government refineries between 2010 and 2020 was estimated at N4.8 trillion.
Mr Steve said he was disturbed that the Port Harcourt Refinery Company was still not functioning despite the rehabilitation projects in the facility for seven years between 2013 – 2019 at an estimated cost of over N12 billion.
Giving a breakdown, the lawmaker said over N28 billion had been spent on revamping the Warri Refinery and Petrochemical Company Limited from 2014 to 2019.
He added that over N2 billion had also been spent on the rehabilitation of the Kaduna Refinery and Petrochemical Company in the past ten years, but it remains unproductive.
The Senate rejected the motion.
The NNPC crumbled all of Nigeria’s four refineries, which have remained dormant for many years.
In 2015, the NNPC inherited a crude oil production volume of 2.05 million bpd, and this crashed further in 2016 to 1.4 million bpd, a 30-year low at the time. It fell much further to 998,602 bpd in April 2023 in relation to the country’s OPEC quota of 1.8mbpd..
In eight years, the government of Muhammadu Buhari spent N17.5 trillion on fuel subsidies. Out of this, N10.5 trillion was spent in the last 18 months of the administration.. The National Bureau of Statistics said Nigeria spent N16.9 trillion importing petrol between June 2015 and October 2022.
Dangote refinery has begun to import crude oil for refining. The NNPC explained that it could not supply the refinery with crude because it (NNPC) has committed its future crude oil to Africa-Export-Import Bank in a $3 billion crude-for-loan deal.
Kyari maintains that petrol subsidy has gone, but the oil marketers insist that without petrol subsidy, the product would have been sold at N800/per litre not the N580/litre and N617/litre current pump price.
The National Secretary, Independent Petroleum Marketers Association of Nigeria, Chief John Kekeocha, said, “I don’t know why the government keeps peddling lies. When they removed the PMS subsidy, a dollar was about N700 and they made us believe that the removal of subsidy would make the supply of products play according to the dictates of demand and supply, looking at forex as the benchmark.
“Now, this is just simple arithmetic, if you removed the subsidy when a dollar was about N700 and today the dollar is more than N1,000, and you are still supplying and giving products at almost the same rate, what is the magic? They are subsidising products as we speak.
“They are spending billions of naira to subsidise products, and because they know that this country may go on fire if Nigerians buy products at about N1,000/litre, they keep twisting facts. Why can’t they come out and tell the world the truth?
“The situation in the downstream oil sector is very painful. How can Kyari go to the open and be telling people that he is not subsidising the product? He also said they have billions of litres of fuel and that nothing is going to happen, let him come out and watch what is happening in town right now.”
