Oil & Energy
NNPC Plans 215,000 Bpd Extra Refining Capacity For Refineries
In order to address the shortfall in the supply of petrol, the Nigerian National Petroleum Corporation (NNPC) has resolved to add 215,000 barrels per day (bpd) refining capacity to its existing nameplate of 445,000 barrels of crude oil per day in Warri, Kaduna and Port Harcourt refineries.
The Group Managing Director, NNPC, Dr. Maikanti Baru, disclosed this at the Society of Petroleum Engineers (SPE Nigeria Council) Annual Oloibiri Lecture Series and Energy Forum in Abuja, last Thursday.
The move, according to him, is through private sector driven colocation of its existing facilities in Port Harcourt Refining Company (PHRC) and Warri Refining and Petrochemicals Company (WRPC).
Baru stated that additionally, the corporation through its new initiative of establishing condensate refineries with private sector participation, is providing clusters for in- country refining capacity totalling about 250,000 barrels of crude per day, which closes the petrol supply- and demand gap, and also creates positive margins to the investors.
According to him, “the country’s petroleum product demand is expected to grow from 13.2 million metric tonnes in 20I5 to 15.1 million metric tonnes in 2020 and 17.3 million metric tonnes by 2025. While the population growth corresponding to this demand is 182 million in 2015, 207 million in 2020 and 234 million in 2025 respectively. The average population growth rate is three per cent per annum.”
The GMD revealed that Nigeria would need a refining capacity of 1.52 million barrels per day of crude oil in order to meet its petrol requirement by 2025, noting that this capacity requirement includes Dangote’s 650, 000 barrels per day refinery, which leaves a short fall of 20 million liters, that is equivalent to 427,000 barrels per day.
“In order to address this shortfall in PMS demand, NNPC is adding 215,000bpd to the existing nameplate capacity of 445,000 barrels per day.
“There is an emerging class of new producers within the oil and gas industry, who are primarily local independents with a non-diversified portfolio and lean balance sheet or required track record to raise substantial funds. They have become important because approximately 15 per cent of both crude oil and gas reserves and national production lie in their hands”, he said.
Baru observed that there is increasing global competition on Nigerian crude oil due to the rise of new production centres across the globe particularly in Africa and Argentina, adding that these portend a new dimension to the Nigerian oil and gas industry.
“Nigeria therefore, needs to unlock new barrels as quickly as possible to stay relevant in the new emerging world. Without adequate funding we cannot meet the targets”, he stated.
The NNPC boss informed that despite abundant oil and gas reserves, Nigeria experiences shortages in electric power and based on Nigeria’s energy consumption current and forecast statistics showed an increase from 6,000 megawatts in 2015 to 30,000 megawatts by 2025.
He further stated that the primary source of the current power supply is hydro and gas, saying that the future consumption, which is expected to drive growth by 2025 would need aggressive development of gas and renewables projects to meet the exponential demand.
He added, “For the upstream, we are committed to aggressive production growth and our target is to achieve a reserve level of 40 billion barrels of oil and production capacity of four million barrels of oil per day by 2025.
“They also require substantial capital for growth. The Nigerian oil and gas landscape is fast changing from lOC-dominated to a much more diversified cocktail of influences involving locals independents and national oil company (NNPC).”
Baru revealed that the corporation is spearheading the drive towards increased development of hydrocarbon reserves by ring fencing exploration budgets and increased professional focus on the Frontier Basins through activities of the Frontier Exploration Services (FES) Division.
“To ensure full energy sufficiency for Nigeria, NNPC is also focusing on developing the nation’s gas resources. The seven Critical Gas Development Projects targeted to deliver about three bscf/d of gas resources to the gas market by 2020 are at different stages of development.
“The Federal Executive Council (FEC) has approved the EPC contractor financing of the Ajaokuta-Kaduna-Kano (AKK) Pipeline.
“Discussions are being finalised on financing for the project while early works has progressed. The intention is to apply this financing model on the development of future gas pipelines such as the QIT to 0B/0B pipeline, Obigbo Umuohia Ajaokuta pipeline. The AKK pipeline is targeted for completion in 2022.
“At completion, the AKK pipeline will deliver gas to the planned Abuja, Kaduna and Kano Power Plants, which would generate a combined additional 3,600 mw to the Notional Grid amongst others.”
Baru, however, said that it is quite an exciting time ahead for the Nigeria Oil and Gas Industry, saying the industry is funding both development and infrastructure through automotive means.
He expressed NNPC’s appreciation for the cooperation of its partners, government and financiers towards moving the industry forward, stating that the corporation’s goal remains value delivery.
The Bill for an act to prohibit gas flaring, encourage commodity utilisation, and provide for penalties and remedies for gas flaring violations has passed its second reading in the House of Representatives.
Sponsored by the Member representing Ikorodu Federal Constituency (APC, Lagos), Babajimi Adegoke Benson, the bill seeks to prohibit the flaring and venting of natural gas, except in strictly regulated circumstances, while encouraging the utilisation of gas resources to foster economic growth and energy generation.
The proposed legislation aims to mitigate the environmental, health, and economic impacts of gas flaring, aligning Nigeria’s oil and gas operations with international climate change commitments.
Offenders, who violate the provisions of the proposed law, would face stringent penalties, including fines of $5 per 1,000 standard cubic feet of gas flared and potential suspension of operations for repeat violations.
Leading debate on the general principles of the bill, Benson said gas flaring has plagued Nigeria for decades, resulting to severe environmental degradation, public health crises, and economic losses while it environmentally, contributes to greenhouse gas emissions, global warming, and acid rain, exacerbating climate challenges.
The lawmaker said public health impacts of the practice are equally dire, as pollutants from gas flaring cause respiratory and cardiovascular diseases, particularly among residents of communities close to flaring sites.
According to him, economically, flaring results in the waste of a valuable resource that could otherwise be harnessed for energy generation or exported to generate revenue.
Benson insisted that the bill was designed to address those issues while bringing Nigeria in line with global standards such as the Paris Agreement on climate change.
“The bill provides for a comprehensive prohibition of gas flaring except in emergencies or when explicitly authorised by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
“Operators are required to submit and implement Gas Utilisation Plans, detailing how gas that would otherwise be flared will be captured, processed, or commercialised.
“Offenders, who violate these provisions, face stringent penalties, including fines of $5 per 1,000 standard cubic feet of gas flared and potential suspension of operations for repeat violations. Furthermore, the Bill ensures that communities affected by gas flaring are entitled to compensation and environmental restoration, creating a mechanism for redress.
“Transparency and accountability are integral to the enforcement framework of this Bill. Operators must submit regular reports on gas flaring incidents, which will be audited and made publicly available by the NUPRC. This approach ensures public oversight and stakeholder engagement, fostering trust and compliance.
“Nigeria’s adoption of this Bill positions the country to emulate such success, ensuring a balance between environmental stewardship and economic development.
“The implementation of this Bill will be overseen by the Nigerian Upstream Petroleum Regulatory Commission, which will monitor compliance through regular audits, enforce penalties, and facilitate gas utilisation projects in collaboration with operators and development partners.
“The Anti-Gas Flaring (Prohibition and Enforcement) Bill, 2024, is a timely and necessary response to one of Nigeria’s most pressing environmental challenges. Its provisions are both practical and forward-looking, addressing immediate concerns while laying the groundwork for a sustainable future.
“I urge all Honourable Members to support the Second Reading of this Bill as a demonstration of our collective commitment to environmental protection, public health and economic progress”, he added.
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Oil major, Shell, has restated its commitment to the development of Nigerian companies through contract awards and scaling up of expertise.
Managing Director, Shell Nigeria Exploration and Production Company ((SNEPCO) Limited, Ron Adams, made the remark while speaking at the Opening Ceremony of the 13th edition of the Practical Nigerian Content forum held in Yenagoa, Bayelsa State, with the theme “Deepening the Next Frontier for Nigerian Content Implementation”.
Represented by the Manager, Business Opportunity, SNEPCO’s Bonga South-West Aparo Project, Olaposi Fadahunsi, he said several benefitting companies had taken advantage of the patronage to expand their operations and improve their expertise and financial strength.
Adams said, “Shell companies execute a large proportion of their activities through contracts with third parties, and Nigeria-registered companies have been key beneficiaries of this policy aimed at powering Nigeria’s progress”.
He emphasized that Shell companies in Nigeria also continued to develop indigenous manpower through scholarship programmes with over 3,772 undergraduate and 109 Niger Delta post graduate scholarships since 2016.
“As we speak, beneficiaries of the 13th edition of the Niger Delta Post Graduate Scholarship awards are pursuing their studies in the United Kingdom. The employability rate of the scheme is high with over 98% of the graduates who won the awards securing employment in the oil and gas industry, academia and Information Technology, among other sectors, within one year of completing their studies”.
He commended the Nigeria Content Development and Monitoring Board (NCDMB) for ensuring compliance with the Nigerian Content Act saying “Nigerian content will continue to be an important part of Shell operations”.
The four-day conference hosted by the Nigerian Content Development and Monitoring Board (NCDMB) and participating companies reviewed progress on the development of Nigerian content pertaining to the implementation of the Nigerian Oil and Gas Industry Development (NOGICD) Act since it was enacted in 2010.
Shell companies in Nigeria are among the more than 700 oil and gas entities that participated in the forum with a strong message of support for Nigerian companies, having awarded contracts worth $1.98 billion to the businesses in 2023 in continuing effort to develop Nigerian content in the oil and gas industry.
The Nigerian National Petroleum Company Limited (NNPCL) has sold the first cargo of Port-Harcourt low sulfur straight run fuel oil (LSSR) to Dubai-based Gulf Transport & Trading Limited (GTT).
The company is expected to load the cargo in the coming days onboard the Wonder Star MR1 ship, signalling the commencement of operations at the plant and the exportation of petroleum products.
The ship would load 15,000 metric tons of the product, which translates to about 13.6 million litres.
Although the volume coming from the NNPC into the global market is still small, the development has the potential to impact the Very Low Sulphur Fuel Oil (VLSFO) benchmarks in the future, while changing the market realities for Atlantic Basin exporters into Nigeria and other regions.
The sulfur content of the export by NNPC stands at 0.26 per cent per wt and a 0.918 g/ml density at 15°C, according to Kpler, a data and analysis company.
The cargo was reportedly sold at an $8.50/t discount to the NWE 0.5 per cent benchmark on a Free on Board (FOB) basis.
Kpler reported that the development would help displace imports from traditional suppliers in Africa and Europe, as Nigeria’s falling clean product (CPP) imports are already decreasing, dragging imports into the wider West Africa region lower as well.