Nigeria Considers Importing Crude Oil to Fuel Kaduna Refinery Amid Production Challenges
The Nigerian National Petroleum Company Limited (NNPCL) is considering importing 110,000 barrels of crude oil per day from Venezuela or Saudi Arabia to fuel the upcoming Kaduna Refinery.
Furthermore, the Dangote, Bua, and other refineries may also have to import approximately 1.322 million barrels of crude oil daily due to oil production challenges, existing crude oil swap contracts, and other commercial issues.
The Dangote Refinery, with a refining capacity of 650,000 barrels per day, currently relies on imported crude oil.
Meanwhile, the Bua Refinery, located in the South-South region, will require approximately 200,000 barrels of crude oil per day starting next year.
The NNPCL plans to reactivate its 445,000 barrels per day refineries between the next month and next year, and existing modular refineries will require 27,000 barrels per day.
Nigeria has been struggling to maintain its crude oil production, recording a 113.52 million barrel shortfall in meeting its OPEC output quota.
The NNPCL, faced with current obligations to supply crude to contractors, has borrowed $3 billion from Afreximbank, reducing the volume of crude available for the local market.
The Nigerian Upstream Regulatory Commission is working to enforce the Domestic Crude Supply Obligation (DCSO) introduced by the Petroleum Industry Act (PIA) to ensure that domestic refineries receive their required crude oil supply.
However, crude oil producers are concerned about the commercial issues surrounding such a transaction, particularly in terms of logistics, data security, and the off-takers ability to sustainably pay for crude oil.
Experts believe that importing crude oil for domestic refineries may be necessary due to the current challenges in the Nigerian oil sector.
However, they emphasize the importance of finding a more sustainable solution to the issues affecting crude oil production in the Niger Delta region.
They also note the challenges in road and pipeline infrastructure, which must be addressed for the smooth operation of refineries.
The decision to import crude oil for domestic refineries highlights the need for long-term solutions to the challenges faced by Nigeria’s oil industry.
Source: The Guardian
