Re: Orient Petroleum PP
Nigeria to save N59b yearly from private refinery
By Sulaimon Salau
The quest to build more private refineries in the country may soon begin to yield dividends, following the pronouncement that Nigeria stands a chance to save at least $500 million (N59 billion) yearly from a single refinery out of couple of private refineries approved by the federal government.
The refinery, currently under construction is poised to save between $500 million and $1 billion depending on the international crude prices, by reducing the amount of foreign exchange currently used to import refined petroleum product into the country.
Nigeria has four refineries, which are now operating far below their installed capacities, making the country to resort to importation of products and call for establishment of private refineries. Orient refinery, one of the recently approved private refinery, with an installed capacity of 55,000 barrels per day, is expected to bridge the gap of about 10 per cent of the 90 per cent refined products imported from oversees.
The Managing Director/Chief Executive of the Company, Mr. Nnaemeka Nwawka at Oil Trading, Tranportation and Logistic (OTL2008) conference in Lagos recently, noted that consumption of petroleum product was on the increase in Nigeria owing to the increasing population, number of cars and industrial growth. This, he said may pose more challenge to the country's refining capacity except for the aid of private refineries.
He said, "Given the shortage of refining capacity worldwide and the reliance on imports to satisfy Nigeria's growing needs for refined petroleum products, the Orient refinery is therefore a direct response to this situation and would leverage on the market opportunities to deliver high returns to its shareholders. Depending on the international market prices, the currency savings will range from $500 million - $1 billion annually for the country from Orient refinery project,"
Orient Private Refinery is located in Anambra State, about 300km inland from the Atlantic coast. Product expected from the refinery at initial stage includes petrol, diesel, aviation fuel, kerosene and LPG, while lubricant oils and asphalts would be added later.
Recounting other impacts of the facility on Nigerian economy, Nwakwa said the project would make a substantial contribution to the GDP, which he opined would be improved directly by increasing the productive industrial sector, with the addition of the considerable income from the refinery.
While indirect benefits include provision of reliable energy supply to the rest of the economy, direct benefit includes creation of opportunities for the commerce and entrepreneurship, well paid, steady jobs, hard currency savings from import substitution, human resource development and skill acquisition through on-the-job training and creation of social harmony in the project area by the company's participatory community relations approach.
Specifically, about 1,500 new jobs are expected to be created directly at the construction stage, 500 during regular operation and at least 5,000 indirect jobs would be created in the area of support services.
According to him, "The supply of processed hydrocarbon products from the refinery- gas and dependable electricity supply will provide impetus and feedstock for other industries in the area. New industries would be attracted to the area, while the efficiency of existing industries would be enhanced significantly with the provision of dependable infrastructure. The government would benefit from additional tax receipts and become more vibrant with the increased job opportunities, healthcare and educational support from the refinery activities.
"By providing an outlet for the crude oil and gas, there will be an increase in associated support industries, thereby accelerating the development of already discovered hydrocarbons, as well as an intensified search for additional oil and gas in the Anambra basin. This will be of benefit to the federal government of Nigeria in its drive to maximize proven hydrocarbon reserves and production capacity in Nigeria." He said.
Up till 2002, refining was monoplised by the Nigerian National Petroleum Corporation (NNPC), until the federal government in May 2002 18 private companies were granted preliminary licenses to establish petroleum refineries in the country which was later withdrawn due to lack of commitment. Of this number, only the Orient Refinery and a couple of others had progressed to obtain the second license, Aproval To Construct and the EIA certificate to commence construction works.
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“The market can remain irrational longer than you can remain solvent.” - John Maynard Keynes
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16th May 2008, 08:22 PM
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