Refiners Association Seeks Review Of Crude Supply Clause In Act

The Crude Oil Refinery Owners Association of Nigeria (CORAN) has identified a major problem that is affecting crude supply to local refineries.

The Association raised concerns about a clause in the Petroleum Industry Act (PIA) that was designed to support local refining but is complicated in the area of crude supply arrangements through conflicting clauses.

The Association observed that while the PIA contains a domestic crude supply obligation, enforcing it has been difficult because of the ‘willing buyer, willing seller’ clause.

The PIA felt the domestic crude obligation must be supported, in the wisdom of the people who drafted it. However, CORAN said refiners still feel a clog in the wheel of that aspect of the PIA that is supposed to enable the refinery.

The president of the Association, Momoh Oyarekhua, who raised the issue also accused the Federal Government and its regulators of paying little attention to the refining sector, saying their poor understanding of the industry is hindering its growth despite its central role in achieving energy security.

Speaking on Tuesday at the second Nigeria Refining Summit held in Lagos, with the theme ‘Refining – Key to Energy Security in Africa’, Oyarekhua described refining as “a new and misunderstood industry in Nigeria” that continues to suffer neglect compared to the upstream and downstream sectors.

“You cannot have an obligation and also put a condition, which is ’willing buyer, willing seller’. When you say this is an obligation, this person must meet it. You don’t say, ‘In case this person thinks like this or doesn’t want it.’ You should meet it. Let them go and discuss,” he said.
“Many people want to identify with the successful upstream and downstream sectors, while the midstream is ignored.

“Success has a lot of friends because everyone wants to identify with success. Upstream is mature; downstream is also mature, because people have been in the upstream and in the downstream for several decades. But refining is very new in Nigeria. So, it’s sometimes difficult to convince people that refining is important,” he said.

According to him, even government Agencies and regulators have shown limited interest in understanding the challenges of refining operations.

“Even our regulators, even the government. It’s a big push to even have refiners in a room for a conversation with the government. It’s always challenging, because it’s an industry many people don’t understand,” Oyarekhua lamented.

On the challenges facing the Dangote refinery, the CORAN president said many Nigerians do not understand the scale and realities of refinery investment, noting that criticism against the refinery’s operations stemmed from ignorance of midstream dynamics.

“You see what’s happening to Dangote today. When people try to talk to me, I say, You don’t understand what is happening. Imagine a man putting a billion litres of product in a tank, and you are expecting the man to rely on somebody else to help him distribute it.

“Because the man, in the value chain of what he’s doing, does not want your failure to affect his business. There are certain things people do not understand about investors. An investor is not the government. He’s not a regulator. He’s thinking of how to move his business forward,“ he added.

The CORAN president further added that Nigerians must understand the midstream sector to appreciate local refiners’ ongoing struggles and contributions.

“Nigerians still don’t understand the midstream. So, it’s only when we understand the midstream that people can begin to see when a Dangote thinks it is being frustrated or an OPAC thinks it is being frustrated; you begin to feel and think like them,” he said.

He urged policymakers to create platforms for continuous dialogue between refiners, government, and other industry players to address existing bottlenecks and policy conflicts.

“Perhaps this summit in the future is going to converge into something like a roundtable where people can look at what the key issues are. No business should be left to collapse. It should be a victory for all that refining now exists in Nigeria,” he added.

Speaking on the contribution of Alhaji Aliko Dangote to the country’s refining capacity and energy security, he said, “Give it or take it away from him, Dangote has created something that today everybody is seeing the value of. What is that value? The value is that everybody can conveniently have petrol in their vehicles in Nigeria without queues. If there is a disruption anywhere in the world, we should be able to have petrol if the crude is made available within this country.”