The management of AIPCC Energy Limited, operators of the Edo Refinery and Petrochemicals Company Limited, has decried the constant shortage of crude oil in spite of the refinery’s full capacity to process 1,000 barrels per day.
The company claims that despite President Tinubu’s directive for the Nigerian National Petroleum Company Limited (NNPCL) to supply crude oil to the Dangote Petroleum Refinery and other modular refineries in the country in naira, the Edo refinery has yet to receive any supply.
Segun Okeni, a spokesperson for AIPCC Energy Limited, explained that the company’s Edo refinery, located in Ologbo, Ikpoba-Okha Local Government Area of Edo State, is operating far below capacity due to a persistent shortage of crude oil.
The refinery, designed to process 1,000 barrels per day, can hardly function at its maximum capacity. Also, it has been hindered by bureaucratic obstacles preventing the fulfillment of supply agreements with Seplat and ND Western, which were established in 2022.
He stated that in 2021, ERPCL’s letter addressed to the Group Chief Executive Officer of NNPC, Mele Kyari, after having a series of meetings and constant communication with him was not attended to.
He said, “This is to raise an alarm on the persistent lack of crude despite being a fully functional 1,000 barrels per day stream crude oil refinery.
“On August 18, 2021, our team, led by our chairman, met with the NNPC CEO and its top management team to discuss our intention to buy crude oil from NNPC, and we immediately wrote seeking crude supply. The letter was dated July 22, 2024.
“In July 2022, the representatives of NNPC (from Abuja and NPDC Benin) visited our facility for site inspection and to confirm the mechanical completion of the Edo refinery.”
Okeni added, “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 a lack of crude oil supply to our refinery.
“We also wrote and had a meeting with the NNPC Exploration and Production Limited between November 2022 and March 2023, indicating our severe need for crude oil supply from oil fields where NEPL has equity stakes.”
The ERPCL representative revealed that despite numerous engagements with the NNPC over the past three years to address persistent crude oil supply challenges, the situation remains unchanged.
To resolve the issue, ERPCL has proposed that the NNPC and other crude oil suppliers establish the necessary infrastructure to facilitate truck loading.
Okeni described the past two years as frustrating for the company. He said, “If we, the local investors, can’t get crude even as small as we are, how can foreign investors be encouraged to invest in the country?
“The total daily demand of all modular refineries is not up to two per cent of the daily crude oil production. Our lifting from the pumping station will even reduce pipeline losses.”
Okeni explained that loading crude directly from NNPC pumping stations to the export terminal would be more cost-effective as it would eliminate pipeline, export terminal charges, and reduce product loss.
This, he argued, would enhance the competitiveness of modular refineries compared to offshore refineries that currently rely on the export terminal. Ultimately, these cost savings could be passed on to Nigerian consumers.
He further said, “If the smallest refinery is not getting crude, it will discourage investors in that area. Due to a lack of crude, the Edo refinery operates less than 10 per cent of installed capacity.
“Nigeria loses millions of dollars following the inability of NNPC to supply crude to modular refineries over the past three years, whose total installed capacity is less than 30,000 barrels per day.”
This article was written by Tamaraebiju Jide, a student at Elizade University
