The Nigerian National Petroleum Company Limited (NNPCL) may begin importation of 110, 000 barrels of crude oil per day from Venezuela or Saudi Arabia to operate the Kaduna Refinery, due to come on stream next year.
Also, according to reports, the Dangote, Bua and other refineries may be forced to import about 1.322 million barrels of crude oil per day amid oil production challenges in Nigeria, existing contracts on crude oil swap as well as other commercial issues.
Currently, the Dangote Refinery, with 650, 000 barrels per day refining capacity, is relying on imported crude, while the Bua Refinery within the South-South region would need about 200,000 barrels per day of crude oil from next year.
NNPCL is also looking to bring back its 445,000 barrels per day refineries between next month and next year, while the existing modular refineries will require 27,000 barrels per day.
Nigeria has been struggling to sustain its crude oil production. The country currently records 113.52 million barrels shortfall in meeting Organisation of Petroleum Exporting Countries (OPEC) output quota. That loss alone is about $8.9 billion in the first seven months of 2023.
While OPEC’s production quota allocated to Nigeria stands at about 1.742 million barrels per day, figures from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) showed that output has been averaging about 1.1 million barrels.
The NNPCL is with current obligations to supply crude to contractors, but the recent borrowing of $3 billion from Afreximbank would drastically reduce the volume of crude the national oil company could provide to the local market.
The Nigerian Upstream Regulatory Commission is currently dragging oil producers in an attempt to enforce Section 109 of the Petroleum Industry Act (PIA), which introduced Domestic Crude Supply Obligation (DCSO) to Nigeria’s oil industry to ensure domestic refineries are not starved of crude oil supply.
Although the regulator is threatening a fine of $10,000, a penalty of 50 percent of their fiscal price per barrel of crude oil not delivered to refineries and denial of export permits, many of the crude oil producers are worried over commercial issues that may come up in such a transaction.
Communities are already being thrown into panic over the development, as they fear possible explosion of NNPC product pipeline or tankers.
In the face of huge subsidy payment that drained the country’s foreign exchange and sparked exchange rate problem to record worst, President Tinubu, who had deregulated the downstream petroleum sector, announced that Port Harcourt Refinery would resume operation by next month.
Since last week, NNPCL spokesperson, Iyabo Abayomi-Ojo could not provide information on the exact plan of the company to ensure evacuation of refined products from the refinery.
The Kaduna Refinery was designed to refine heavy crude, primarily from Venezuela and Saudi Arabia. The declaration by the Group Chief Executive Director of NNPCL, Mele Kyari and the Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, that the facility, being rehabilitated along with other assets for $2.2 billion would start work next year, is an indication that the state oil firm would have to import crude oil for its operation.
Abayomi-Ojo could not make clarifications on the planned importation, which could see the NNPCL transporting the crude with tankers from Lagos to Kaduna in the face of pipeline challenges.
