August 24, 2022/CSL Research
According to Thisday news report, the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPCL), Mallam Mele Kyari, has rejected calls for the legalisation of artisanal illegal refineries in the Niger Delta. Kyari, who spoke on the state-run Nigerian Television Authority (NTA) described the so-called illegal refining facilities as mere cooking pots, insisting that the growing demand for their official recognition was unfounded and unscientific. In his words, “that is why there are licenses given out for modular refineries and they can produce up to 1,000 barrels to 20,000 barrels per day. Refining is a science of its own. The cooking pots you are seeing are not refineries in any sense.
There is simply no way you can convert these cooking pots to legal refineries. It is not possible. But modular refineries can be constructed and the NNPCL has a framework for supporting those who want to do modular refineries.” Having continued unabated despite the increased pipeline surveillance operations, some stakeholders have opined that the legalisation of the artisanal illegal refineries in the Niger Delta could help increase local supplies. However, it was recently reported that troops of Operation Dakatar Da Barawo and Operation Delta Safe both fighting against economic sabotage and oil thievery in the Niger Delta, have discovered a combined 167 illegal refineries and destroyed them while 18 criminal suspects were arrested.
It is not hearsay that Nigeria has not derived what it should from the current high crude oil prices largely due to the perennial issues of pipeline vandalism, oil theft and some other factors responsible for various production shut-ins. Rather, rising crude oil prices are posing significant fiscal challenges to our economy. The high cost of fuel subsidy and maintenance of non-functioning crude oil refineries in recent times has reinforced our long-standing callfor the deregulation of the downstream sector and privatization of the refineries. We understand that the elimination of subsidies is a politically sensitive discourse that many administrations do not want to address to avoid backlash from an already impoverished populace. However, the current fiscal challenges facing the country leave the government with little or no choice.
Meanwhile, according to a Punch news report, six international oil companies are to remit a total of N442.37bn in August 2022, being proceeds from the sale of domestic crude oil in May 2022, figures obtained from the Nigerian National Petroleum Company Limited on Monday showed. NNPC explained that the N422.37bn was for 8.887 million barrels of oil for May 2022 domestic crude payable in August 2022, adding that the six companies were joint venture partners of the national oil company. The companies include Chevron Nigeria Limited, Mobil
Producing Nigeria, and Nigerian Petroleum Development Company, the flagship upstream subsidiary of NNPC. Others include Total Exploration and Production Nigeria, First Exploration and Production, as well as Addax Petroleum.
Figures from the oil firm showed that Chevron will pay N162.24bn for 3.49 million barrels of crude oil, while N90.06bn for 1.9 million barrels of crude is expected from Mobil this month. NPDC and Total are to remit N41.13bn and N47.26bn for 948,296 and 948,776 barrels of crude oil, respectively. Similarly, the recently commercialised company stated that First E&P and Addax will pay N33.498bn and N48.188bn for 650,071 and 948,251 barrels of crude oil in August.
