Minister Raises Concerns Over Crude Shortage for Nigerian Refineries

The Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, has once again voiced apprehension regarding the availability of sufficient crude oil for the operation of key refineries in Nigeria. Expressing his concerns during the 2024 sector retreat for the ministry held in Abuja, the minister highlighted the potential challenges facing refineries including the newly inaugurated Dangote Petrochemical Refinery, Port Harcourt Refinery, Warri Refinery, Kaduna Refinery, and modular refineries across the nation.

The theme of the retreat, ‘Building Synergy for Enhanced Development in the Oil and Gas Sector,’ underscored the importance of collaboration to address pressing issues within the industry. Senator Lokpobiri emphasized the need for increased production in the sector to ensure an adequate supply of crude oil for refinery operations and meet targets set by President Bola Ahmed Tinubu.

“The first target is to see how we can ramp up production, and then we can meet our target in terms of increase in revenue, meet our obligation in the mid-stream and upstream,” stated Senator Lokpobiri, highlighting the critical objectives outlined for the ministry.

Concerns over the availability of feedstocks for refineries were initially raised by Senator Lokpobiri during the previous year’s retreat and reiterated at the seventh edition of the Nigeria International Energy Summit held in February. Emphasizing the scale of demand, he noted that the Dangote refinery alone would require up to 650,000 barrels of crude oil daily, with government-owned refineries also needing substantial quantities to operate effectively.

Despite Nigeria’s significant reserves, investments in the sector have been stagnant in recent years, contributing to challenges in meeting production targets. Senator Lokpobiri stressed the need for a competitive fiscal and regulatory framework to attract sustainable investment across the petroleum value chain.

Meanwhile, the Dangote refinery’s recent purchase of two million barrels of crude from the US has drawn attention to the nation’s reliance on foreign supply despite its petro-state status. While capable of processing domestic feedstock, the refinery’s flexibility to utilize various African crudes and imports from distant sources underscores the ongoing struggle to optimize local production and refining capacity.

Nigeria’s oil production has consistently fallen short of OPEC quotas, with reports indicating a decline from 2.51 million barrels per day in 2005 to 1.77 million barrels per day in 2020. Additionally, challenges such as pipeline vandalism and crude theft have further impeded production efforts, highlighting the need for comprehensive strategies to address systemic issues within the sector.