The Nigerian National Petroleum Company (NNPC) Limited, has stated that it would not be right for the government to legalise artisanal refineries that operate within the shores of the country, saying they are mere ‘cooking pots’.
BizWatch Nigeria understands that artisanal oil refining is small-scale crude oil processing or subsistent distillation of petroleum that doesn’t comply with extant laws.
However, in an interview on NTA monitored by our correspondent, Mele Kyari, the Group Managing Director (GMD) of NNPC, stated that instead of illegal refineries, the establishment of modular oil refineries should be encouraged.
“That’s why there are licences given out for modular refineries, and they can produce up to 1,000 barrels to 20,000 barrels per day (bpd). Refining is a science of its own. The cooking pots you are seeing are not refineries in any sense.
“There’s simply no way you can convert these cooking pots to legal refineries. It’s not possible. But modular refineries can be constructed and the NNPCL has a framework for supporting those who want to do modular refineries,” the NNPC chief stated.
Speaking further, Kyari attributed dwindling oil revenue to crude oil theft, which he stated consequently resulted in production shut-ins.
“It works two ways — one is the direct stealing of the oil and then being processed at the illegal refineries and also taken out from the pipelines.
“What happens is that whenever you have such massive infractions, we shut down our facilities and therefore, this is opportunity loss.
“The production that could have come on the table and that is why we are currently on the average of 1.4 million barrels of oil.
“We had the capacity to do 2.1 million. You can technically say that you have lost about 700,000 barrels of oil per day of production. But it doesn’t mean 700,000 bpd are stolen.
“What in reality happens is that when those stealing take place, we probably lose up to 200,000 bpd of direct losses to thieves. And beyond this, once you have this infraction getting to a level we cannot manage, in some instances, some of the pipeline losses get up to 80 percent to 90 percent loss at one point,” he explained.
