Refineries in Nigeria, both government-owned and private, are expected to be operational by the end of the month. However, concerns have been raised regarding the availability of crude oil from the Nigerian National Petroleum Corporation (NNPC) Ltd. to feed these refineries.**
Addressing these concerns, former Minister of State for Petroleum, Prof. Emmanuel Kachikwu, clarified that refineries worldwide import crude oil for processing and subsequent local and international sales.
He emphasized that refining crude from abroad incurs minimal additional costs compared to using domestically sourced crude due to its uniform international price.
Furthermore, he stressed that NNPC has the freedom to choose buyers for its refined products, prioritizing local refineries for both patriotic and economic reasons.
Kachikwu urged Nigerians to support efforts to refine crude domestically, assuring that the government is committed to optimizing the oil supply chain for the nation’s economic benefit.
Speaking on the topic “Nigeria Energy Policies: Energy Transition, Domestic Crude Obligation, Oil Subsidy & PIA,” Kachikwu highlighted the 20-year delay in the development and passage of the Petroleum Industry Act (PIA). He estimated that this delay cost Nigeria $15 billion annually, with additional investment losses amounting to $50 billion over the past decade.
He attributed the stagnation of several large-scale oil and gas projects to the delayed enactment of the PIA. These projects, such as Bonga Southwest-Aparo (BSWA) and Bonga North and Etan-Zabazaba (EZ), have the potential to unlock substantial reserves and boost production, leading to increased government revenue.
While acknowledging the PIA’s shortcomings, Kachikwu expressed satisfaction with its eventual passage. He further stressed the government’s commitment to continuously improving the legislation to maximize benefits from the oil sector.
He said, “It was estimated that Nigeria has lost about $50 billion in investment over the last ten years and according to Rystad Energy, Nigeria was estimated to have lost about $15 billion annually due to the delays in passing the PIB.
“Large-scale projects like Bonga Southwest-Aparo (BSWA) and Bonga North and Etan-Zabazaba (EZ) have been on hold largely due to fiscal uncertainties.
“These projects can unlock larger reserves thereby reversing the depleting reserves and boosting production of hydrocarbons and ultimately generating more revenue to the government.”
Kachikwu also called for learning from past mistakes and swiftly developing a framework for identifying and exploring other abundant mineral resources in Nigeria. He noted the global shift towards clean and renewable energy due to environmental concerns, stressing the need to diversify away from oil reliance.
He stressed the importance of offering attractive incentives to oil investors to maintain competitive edge, as new oil fields are being discovered in other countries. Additionally, he advocated for minimizing government interference in NNPC’s operations to enable its professional management.
Kachikwu reiterated the government’s commitment to maximizing the benefits from the oil and gas sector while proactively preparing for the transition towards a cleaner and more sustainable energy future.
He said: “In the last four years, the focus has been on production or products achieved with low carbon emission. The world is moving away from oil due to efforts to tackle environmental pollution leading to global warming.
“Non-fossil fuel, solar and nitrogen are the in-thing because they are cleaner energy sources. Once people move away from a product source, financing for it dries up gradually. The PIA that was eventually passed was not as robust as it should have been.
“Nigeria should offer more incentives to oil investors because new fields are being discovered in other countries thereby increasing competition. Ours are already developed and predictable but we must be sensitive to competition.
“I’m still seeing a lot of government interventions in NNPC. But we should allow NNPC to run professionally.”
