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Chineme Okafor writes about the likely benefits and challenges of the planned construction of an oil refinery in a border town of Katsina between Nigeria and Niger, to Nigeria's economy
a refinery with brand new processing capacity of 150,000 barrels per day (bd) as part of a government-to-government inspired initiative.
Although planned in a border town of Katsina between the two countries, the refinery A crude oil pipeline linking it to the Niger oil fields.
It should be financed by private sector financing and managed by private investors, although supported by the governments of both countries. It has also come at a time when Nigeria has not yet run its four refineries at full capacity, despite rumors that considerable funds would have been reinvested in the past
. and set up two teams that will be managed jointly by the country leaders.
Inaugurated by President Muhammadu Buhari, alongside Niger's President, Mahamadou Issoufou, the task forces will prepare, by December 2018, a detailed roadmap for implementing the project.
The roadmap would include, among other things, bankable feasibility studies for the refinery and badociated pipeline project; the optimal project site and pipeline routes; security plan; as well as consortia of selected investors for projects.
In a nutshell, it will be said to both countries that it would be prudent to build the refinery.
Essentially headed by Ibe Kachikwu, Nigerian Minister of State for Oil Resources. and his Nigerian counterpart, Foumakoye Gado, the teams should submit their report after which the implementation of the project could begin and possibly last for a period of two years.
Although there is no estimate of the cost of the project, has been made, it is however expected that financial commitments amounting to billions of dollars would be required and from the private sector financiers.
Rationale for Another Refinery in the North
Existing Refinery – The Kaduna Refinery That Was Built in the 1980s and Managed by the Nigerian National Petroleum Corporation (NNPC) – has realized since its inception, experts who spoke with THISDAY the new developments were uncomfortable with the plan.
Among other things, they raised valid questions about the economic justification of the refinery; the financing terms of the project; its management or operational model likely; However, its promoters – Nigeria and Niger – have shown resilience in their argument for the project, which they say would be a win-win solution for both countries. Buhari said the initiative would provide a reliable market for the failed crude oil volumes of the Republic of Niger, and provide petroleum products to Nigeria to allow it to exit imports of refined products as planned in 2019. [19459012Thepresidentnotedthattheprojectwouldbeledbytheprivatesectorwiththefullsupportofthegovernmentsofbothcountries"NigeriaandNigerhavehadexcellentrelationsforseveraldecadeswhiletheirneighborssharealongborderwithcommonculturalandhistoricalties"NigeriaseesthiscooperationoncrudeoilexportfromtheRepublicofNigerandtheconstructionofrefiningfacilitiesinthestateofKatsinaasawin-winforbothnations"saidBuhari
He added: "In addition, current border exploration efforts in the northern part of the country (Chad Basin, Gongola Basin, Sokoto Basin, Bida Basin and Benue Basin) will also translate into by the addition of additional oil in the proposed pipeline corridors and a possible refinery around the Kaduna axis. "
Opening the work team, the president said:" A steering committee has been set up to be chaired by the Nigerian Minister of State for Petroleum Resources and the Nigerian Minister of Petroleum, leadership, leadership and supervision of governance for the project. "
In agreement with Buhari Niger's president, Issoufou, said the project would strengthen the He explained: "The country sees the refinery as a way to unite to the country after being separated by colonialism. Kachikwu, for one, explained the decision to build the refinery and took the pipeline after the discovery of the original plan to build a crude oil line. He noted that almost all government funds would not be allocated to projects, adding that investors were already lining up to participate
. he, about 50 investors were at the meeting to observe the processes and strengthen their initial expression of interests.
The minister also said that governments were aware of the security challenges in the North, but not deterred by him and would go forward. the plan. He noted that the Republic of Niger was the least affected by the security problems caused by Boko Haram terrorists.
"It is decided to build a pipeline from the Republic of Niger to the Nigerian border and build a refinery of 150,000 barrels a day, depending on the gross volume of Niger and what they find. 19659003] "The study must be done and we know what it is. Technical and financial components, negotiation of financing. We have mentally structured our minds over a period of two years, but that depends on what we find, "said Kachikwu.
He noted that Katsina had been chosen to host the refinery because she was close of Niger
Other justifications
Despite the defenses of Buhari, Issoufou and Kachikwu, for the project which was to elicit comments from the Nigerian public, THISDAY addressed Suleiman, advisor Kachikwu (STA) main technical report on refineries and downstream infrastructure, and on the technical committee of the project, to provide detailed explanations of its economy and sustainability.
THISDAY sought to know, among other things, whether Niger had oil reserves He explained that the country currently produced about 90,000 barrels of oil a day, with the intention of bringing in additional volumes
He noted that Of the 90,000 tonnes produced by the country, 20,000 barrels went to its existing refinery that mainly refined diesel, while the remaining 70,000 barrels remained somewhat stuck because it was not directed access to the sea. Suleiman also told THISDAY that Niger's access to the sea was through Cameroon, thousands of kilometers away, through a complicated pipeline network. .
He added that Nigeria was perhaps the best alternative. Country (Nigeria) felt that it was a good opportunity to advance its will to become Africa's first oil center.
According to him, the northern states of Nigeria accounted for about 40% of Nigeria's total consumption of petroleum products. the refinery when it enters service. He also hinted that Niger had three very prolific oil blocks that would supply the refineries.
"It is a competitive world.Nigeria intends without excuse to be the center of the hydrocarbon business in Africa and therefore any opportunity that will give us that unique position of To be the hub, we will catch it because it has potential for commercial activities in all aspects of life.
"There is no justification that ships coming to Nigeria and all other African countries go to Cotonou to feed and bunker. If we have bunkering facilities in our territorial waters, you can imagine the volume of trade and employment opportunities there.
He claimed that 14 expressions of interest on the project had been received by Russian, Turkish, Chinese, and local investors, adding that a clean pre-investment process would be used to obtain the best for the project.
Security, other issues
Asked if the plan had taken into consideration the particular social challenges, especially the terrorism and the mbadive Suleiman said the feasibility studies of the project would take all this, but pointed out that it was perhaps the best way to stem the wave of immigration from Nigeria's porous border with the Republic of Niger.
only when the The refinery would help and provide jobs to Nigerians, as well as ways to monetize Niger's crude oil for its people and government, and the two countries would become the main beneficiaries.
Immigration from Niger to Nigeria would be minimized, while crime badociated with terrorism in the north would be reduced.
Expert Opinions
Notwithstanding, the experts who spoke to THISDAY had mixed feelings about the project. Some felt that it was a good development, while others felt that it was a little risky and that they did not attract the interest of the private sector as predicted the promoters.
For example, Mr. Dan Kunle, world energy expert, said that a success he had competitive access to crude oil.
Kunle also asked that a confirmation on the oil reserves of the Republic of Niger be made to ensure that the crude supply is guaranteed and guaranteed.
Expert opinion based on the knowledge of the industry and also because I want Nigeria to succeed, but I must also tell you first that the crude oil business does not. were not enjoyable in Nigeria for more than 50 years
President Obasanjo tried to sell the Kaduna refinery to the Chinese so that they could get crude oil to the refinery, but this plan does not have the same effect. did not work, "said Kunle.
He added, "So, yes, the location is a good idea but what is the m? The main critical success factor for the crude oil refinery is the competitive access to the crude. On this basis, they have to go to Niger to confirm and validate the proven reserve there which would serve as raw material for the refinery.
"I said it because I know that Niger has a contractual agreement with the Chinese who built a refinery there"
Kunle, also asked why the Chinese had not built a larger refinery in Niger if the country had a large oil reserve, saying: "For the Chinese not to be too aggressive, it raises a question mark on the proven oil reserves Niger."
Another The expert, who however preferred to express, said the location issue was almost irrelevant in the conversation, but that the ability of developers to raise or attract funds was important.
pointed out that Nigeria's refusal to deregulate its downstream petroleum sector could be rejected by voluntary investors.
"While the news of the proposed refinery is well received, it is not entirely clear whether government proponents and private sector private investors will be able to raise financing for the construction of the proposed refinery. pipeline and refinery given the fixed retail price of gasoline (in Nigeria)
"Not everyone is a Dangote capable of raising funds for a refinery. challenge of pricing. However, there is hope that the government will take the right steps to increase the likelihood of success of several ongoing downstream projects in the industry – including this one, "said the company. expert
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