Oil
NNPC to cut crude oil refining costs
ABUJA-THE Nigerian National Petroleum Corporation is looking at significantly reducing the cost of refining crude oil within the c
Ibe KACHIKWU
ountry through resource co-location.
With the co-location model, the corporation will ensure that new refineries are situated together in clusters, which will allow for sharing of critical infrastructure like power, pipelines and technologies, among other resources.
This model, our correspondent learnt, was at the proposal state, and was targeted at encouraging the private sector to invest in refineries. Currently, over 440,000 barrels of crude oil are meant for local refining, but a large proportion of this quantum is unutilised because of the near-comatose state of the refineries, except for Port Harcourt plant which has shown some level of improvement in recent times.
The Group Managing Director, NNPC, Dr. Ibe Kachikwu said in an interview that the co-location model for new refineries was feasible and had the capacity to drive efficiency in the midstream segment of the petroleum industry, especially in the area of crude refining.
He said the corporation was open to Nigerians willing to key into the model and give the petroleum sector a lift.
“The co-location model for the refineries is actually a proposal. I will like a situation where we will deal with our own existing refineries and then find individuals who are willing and ready to invest in other refineries,” he said.
Speaking on how the model would work, Kachikwu explained, “In a co-located area, they (refineries) share common tanks, common pipelines, common power, and this will obviously bring down the cost of building refineries, and the effect of that is, if they are sharing technical skills and management together, there would be huge cost efficiency.
“We have to do our marketing very well and get people who are willing to do this.”
In the interim, he said the hope of the NNPC was to get the existing refineries to work, saying that the model all over the world today was that the value obtainable from crude was at the upper level of the value chain.
The NNPC GMD stated, “To produce crude, there is no much technologies to be deployed as crude is the same everywhere. The only time you get an incremental value in terms of pricing is when you refine.
“Crude is cheap, and you need to refine to make some quick returns. There is the need for us to expand our refineries and grow more refineries and ship out refined products to the rest of Africa because there is a lot of market for them.
“Unfortunately, ours haven’t really worked and we need to get them to work.”
The NNPC had last month said with respect to the new refineries, its role would be limited to providing the required space for their operations.
Kachikwu was quoted to have said, “I am pushing to build new refineries next to our existing plants in order to boost the nation’s refining capacity for the common good.
“The new refineries will be developed by private investors and NNPC’s role will be just to provide them with space close to the existing refineries to enable them share key facilities such as pipelines and storage facilities.”
The GMD pointed out that though the current challenges militating against the operations of the refineries were huge, they were not insurmountable.
He also praised the vision and foresight of past Nigerian leaders for establishing the refineries and challenged the present generation to sustain the vision, adding that all hands must be on deck to salvage the situation.
The Nigerian National Petroleum Company Limited (NNPC) has unveiled a bold strategy to reduce methane emissions in the oil and gas sector by 60% by 2031, with an ultimate goal of achieving net-zero emissions by 2060.
This announcement reinforces Nigeria’s leadership role under the Global Methane Pledge initiative and its commitment to tackling climate change.
The Group Chief Executive Officer of NNPC, Mele Kyari, disclosed these plans during a meeting on Thursday with Robert Leahman, the U.S. State Department’s Global Methane Program Manager, and a delegation from Deloitte.
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The discussions, held at the NNPC Towers in Abuja, focused on collaborative efforts to reduce methane emissions through innovative and sustainable practices.
“Reducing methane emissions is not just an environmental necessity but also a strategic imperative for Nigeria’s energy transition. We are leveraging partnerships to adopt global best practices and innovative solutions,” Kyari stated.
Key among these efforts is a pilot project in the Niger Delta, aimed at establishing emissions baselines, mitigating methane leaks, and promoting sustainable operations across Nigeria’s energy sector.
The project, a partnership between NNPC, Deloitte, and the U.S. Bureau of Energy Resources, will utilize data-driven methodologies to pinpoint and address methane hotspots.
Robert Leahman commended Nigeria’s proactive stance, describing it as a benchmark for other nations on the continent.
“Nigeria’s leadership under the Global Methane Pledge sets a standard for the continent. These initiatives will not only help reduce emissions but also drive sustainable development in the energy sector,” he said.
Kyari highlighted the broader benefits of addressing methane emissions, noting its significance for both environmental protection and economic efficiency.
“This collaboration is a game-changer. By addressing methane leaks, we’re reducing waste, saving costs, and protecting the environment. It’s a win-win for our economy and the planet,” he added.
In a strategic move to revitalize Nigeria’s oil and gas sector, the Federal Government has unveiled two key fiscal incentives aimed at attracting investment and enhancing energy security.
The announcement was made by Mr. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy on Wednesday.
The first initiative, the Value Added Tax (VAT) Modification Order 2024, introduces critical exemptions for essential energy products and infrastructure, including Diesel, Feed Gas, Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), Electric Vehicles, Liquefied Natural Gas (LNG) infrastructure, and Clean Cooking Equipment.
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These exemptions are designed to reduce living costs for Nigerians, promote energy security, and accelerate the transition to cleaner energy alternatives.
The second initiative, the Notice of Tax Incentives for Deep Offshore Oil & Gas Production, offers new tax relief options for deep offshore exploration projects.
This measure aims to position Nigeria’s deep offshore basin as a premier destination for international oil and gas investments, boosting the country’s appeal to foreign investors.
These reforms are part of a broader set of policy initiatives, known as Policy Directives 40-42, endorsed by President Bola Ahmed Tinubu.
The directives reflect the administration’s commitment to fostering sustainable development in the energy sector and enhancing Nigeria’s competitive edge in the global oil and gas market.
By Yemie Adeoye
NIGERIA’s President Bola Tinubu has announced that the protracted ExxonMobil-Seplat upstream oil divestment will be formally approved by the Minister of petroleum within a matter of days, just as he announced his government’s intention to expand the Compress natural Gas, CNG buses initiative.
The President who stated this during his Independence day nationwide broadcast stated that the move is in line with his administration’s commitment to free enterprise, free entry and free exit in investments which is the hallmark of his administration investment policy.
“Fellow compatriots, our administration is committed to free enterprise, free entry, and free exit in investments while maintaining the sanctity and efficacy of our regulatory processes. This principle guides the divestment transactions in our upstream petroleum sector, where we are committed to changing the fortune positively. As such, the ExxonMobil Seplat divestment will receive ministerial approval in a matter of days, having been concluded by the regulator, NUPRC, in line with the Petroleum Industry Act, PIA. This was done in the same manner as other qualified divestments approved in the sector.”
The President also seized the opportunity to plead with Nigerians to be patient with his administration’s reform policies. “As your President, I assure you that we are committed to finding sustainable solutions to alleviate the suffering of our citizens. Once again, I plead for your patience as the reforms we are implementing show positive signs, and we are beginning to see light at the end of the tunnel”.
“Our energy transition programme is on course. We are expanding the adoption of the Presidential Initiative on Compressed Natural Gas for mass transit with private sector players. The Federal Government is ready to assist the thirty-six States and FCT in acquiring CNG buses for cheaper public transportation.
Fellow Nigerians, while we are working to stabilise the economy and secure the country, we also seek to foster national unity and build social harmony and cohesion. Our economy can only thrive when there is peace”. he enthused.
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