Edo Refinery has raised alarm over crude supply issues despite agreements with NNPC, operating below capacity due to persistent shortages.
The management of AIPCC Energy Limited, operators of the Edo Refinery and Petrochemicals Company Limited (ERPCL), on Sunday raised the alarm over the persistent lack of crude despite being a full functional 1,000 barrels per day stream crude oil refinery.
It said in spite of the disclosure by the Dangote Refinery on the refusal of the Nigerian National Petroleum Company Limited (NNPC) and the directive by President Bola Tinubu that the company should supply crude oil to Dangote Refinery and other Modular Refineries in the country in Naira denomination, the Edo Refinery was yet to get any from the relevant authorities.
Speaking to journalists in Benin-City at the weekend, the management of Edo Refinery situated at Ologbo in Ikpoba-Okha local government area of Edo State, said it was facing significant challenges due to persistent lack of crude oil supply.
Representative of the company, Segun Okeni, who spoke at the event, said the refinery, which requires 1,000 bpd stream crude can barely function at full installed capacity.
Okeni said though the company has had existing crude oil supply agreements with Seplat and ND Western since 2022, bureaucratic bottlenecks had prevented the refinery from accessing the much-needed resource.
He alleged that in 2021, ERPCL’s addressed a letter to the Group Chief Executive Officer of NNPC, Mele Kyari, after a series of meetings and constant communication with him did not hear much fruit.
“On August 18, 2021, our team led by our chairman, met with the NNPC GCEO and its top management team to discuss our intention to buy crude oil from NNPC and we immediately wrote seeking crude supply.
“In July 2022, the representatives of NNPC visited our facility for site inspection and to confirm the mechanical completion of the Edo refinery. In September 2022, we were invited for a commercial negotiation meeting with the NNPC head of terms, after which we sent a follow-up letter identifying the oil fields from which we can offtake crude oil.
“In March 2022, we also wrote to the Ministry of Petroleum Resources, informing it of our refinery status, future projects and our challenges of lack of crude oil supply to our refinery.
“We had also written and had a meeting with the NNPC Exploration and Production Limited (NEPL) between November 2022 and March 2023, indicating our severe need for crude oil supply from oil fields where NEPL has equity stakes,” he stated.
The ERPCL representative however, noted that despite the meetings, correspondences and communications with NNPC over the past three years on the issues of crude oil supply, nothing was done.
Besides, he identified other key issues encountered by the refinery as the inability of NNPC to assign any of the preferred fields to allocate crude to the company since it started having engagement with the management August 18, 2021.
He pointed out that even with the options given to allocate crude to the refinery from ND Western, First Hydrocarbon, and Seplat, nothing happened till date.
“ERPCL also has a Crude Oil Supply Agreement with ND Western to lift crude oil from the Ughelli Pumping Station (UPS) owned by NEPL and operated by Shoreline.
“We have held several meetings with Shoreline and Heritage Oil and indicated our readiness to make modifications needed to offtake crude oil from the UPS but no progress has been made till date,” the company added.
On the way forward, ERPCL said NNPC and other producers need to put loading infrastructure in place to allow for truck loading, decrying why Dangote would be getting 30,000 bpd because it opened up to the public, while smaller refineries are not being served which he likened to lack of respect for small people who can also grow the economy alongside the big players.
The representative of ERPCL therefore sought Kyari’s intervention as group GCEO of NNPC a d implement the Seplat-ERPCL agreement to enable Edo refinery to start lifting crude oil from Oil Mining License (OML).
Describing the past two years as frustrating for the establishment, he said: “If we local investors can’t get crude even as small as we are, how can foreign investors be encourage to invest in the country.
“The total daily demand of all modular refineries is not up to 2 per cent of the daily crude oil production. Our lifting from the pumping station, will even reduce pipe line losses,” he added.
Okeni argued that the advantage of loading from NNPC pumping stations to the expert terminal was that it costs less because the cost of pipeline export terminal charges and loss will be saved.
According to him, this will make the modular refineries more competitive than the offshore refineries who come to the export terminal to take the crude, thereby making cost savings to trickle down to Nigerian consumers.
“If the smallest refinery is not getting crude, it will discourage investors in that area” Okeni said, contending that because of lack of crude, OPAC Refinery operates less than 3 per cent of its installed capacity and Edo Refinery less than 10 per cent of installed capacity.
He noted that Nigeria loses millions of dollars following the inability of NNPC to supply modular refineries over the past three years which has a total installed capacity of less than 30,000bpd.
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