Nigerian Petroleum Policy
     (Downstream)
            Dr. Adeoye Adefulu
           Odujinrin & Adefulu
Barristers, Soli...
Outline

• National Oil and Gas Policy
• Refineries
• Product distribution network




21/09/2009        Odujinrin & Adefu...
National Oil and Gas Policy
             National Oil and Gas Policy

• Uniform pricing to remain
• Petroleum Equalization...
National oil and gas policy (contd.)
 National oil and gas policy (contd.)

• Coastal bunkering and export of refined 
  p...
Refineries 
                            Refineries

• Nigeria has four refineries
      – Old Port Harcourt Refinery‐60,00...
Refinery capacity
                           Refinery capacity
      – New Port Harcourt Refinery –150,000bpd, 
        co...
Refinery capacity
                        Refinery capacity

• Warri Refinery and Petrochemical Company 
  Limited
      –...
Refinery capacity
                         Refinery capacity
• Kaduna Refinery and Petrochemical Company 
  Limited
      ...
Refinery capacity problems
             Refinery capacity problems

• Refineries have a total nameplate capacity of 
  445...
Refinery capacity problems (contd.)
Refinery capacity problems (contd.)

• Refinery business previously operated as state ...
Policy solutions
                  Policy solutions

• What is government’s current policy solution?
• How do we resolve t...
Product distribution
              Product distribution

• Currently the preserve of the Petroleum and 
                  ...
Product distribution network  under the 
                   PIB
• PPMC & NGC pipeline and depot assets to be 
            ...
Product distribution network  under the 
                   PIB
• Open access to:
      – Pipelines, 
          p       ,
...
Product Pricing
              Product Pricing

• Pricing to remain regulated and shall be set by 
  PPRA
• Will subsidies ...
Product pricing (contd.)
                Product pricing (contd.)

• Petroleum Equalisation
      – Fund to remain under P...
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Nigerian Petroleum Policy (Downstream)

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A review of Nigeria\'s policy in the Downstream sector

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Nigerian Petroleum Policy (Downstream)

  1. 1. Nigerian Petroleum Policy (Downstream) Dr. Adeoye Adefulu Odujinrin & Adefulu Barristers, Solicitors & Notaries Public Barristers  Solicitors & Notaries Public Lagos – Abuja – Port‐Harcourt
  2. 2. Outline • National Oil and Gas Policy • Refineries • Product distribution network 21/09/2009 Odujinrin & Adefuluestd. 1972 2
  3. 3. National Oil and Gas Policy National Oil and Gas Policy • Uniform pricing to remain • Petroleum Equalization Fund should be made Petroleum Equalization Fund should be made  orivate sector driven and managed • PEF i l d i i PEF to include riverine and interior areas di i • Jetties to be available on an open access basis p • Railway facilities should be upgraded to  complement pipeline system and reduce road  l t i li t d d d haulage 21/09/2009 Odujinrin & Adefuluestd. 1972 3
  4. 4. National oil and gas policy (contd.) National oil and gas policy (contd.) • Coastal bunkering and export of refined  p products and expansion of Nigerian retail  p g outlet business to West Africa to be promoted • Strategic reserves to be set up; both private Strategic reserves to be set up; both private  (60 days) and government owned (90 days) • Major producers to be encouraged to refine at  least 50% of their products  least 50% of their products 21/09/2009 Odujinrin & Adefuluestd. 1972 4
  5. 5. Refineries  Refineries • Nigeria has four refineries – Old Port Harcourt Refinery‐60,000 bpd,   y , p , commissioned in 1965. Simple hydro skimming  p plant comprising of 3 Processing units: p g g • ‐Crude Catalytic Unit (CDU) • ‐Catalytic Reforming Unit (CRU) Catalytic Reforming Unit (CRU) • ‐Liquid Petroleum Gas Unit (LPGU) 21/09/2009 Odujinrin & Adefuluestd. 1972 5
  6. 6. Refinery capacity Refinery capacity – New Port Harcourt Refinery –150,000bpd,  commissioned in 1989‐ more complex refinery  with 8 processing units: • Crude Distillation Unit(CDU) • Vacuum Distillation Unit(VDU) Vacuum Distillation Unit(VDU) • Naphtha Hydro treating Unit(NPU) • Catalytic Reforming Unit(CRU)  • Kerosene Hydro treating Unit(KHU) • Fluid Catalytic Cracking Unit(FCCU) • Dimersol Unit (DIMU) Dimersol Unit (DIMU) • HF Alkylation Unit  • Gas Concentration Units 21/09/2009 Odujinrin & Adefuluestd. 1972 6
  7. 7. Refinery capacity Refinery capacity • Warri Refinery and Petrochemical Company  Limited – Refinery commissioned in 1978 – Petrochemical Plant commissioned in 1988 Petrochemical Plant commissioned in 1988 • Fuels Plant  • Polypropylene Plant – installed capacity –35,000 tons of polymer Polypropylene Plant  installed capacity  35,000 tons of polymer  per year • Carbon Black Plant – installed capacity –18,000 metric tons of  various grade of carbon black per annum i d f b bl k • Utilities and Offsite Facilities: Power Plant, Tank Farms, Jetty etc 21/09/2009 Odujinrin & Adefuluestd. 1972 7
  8. 8. Refinery capacity Refinery capacity • Kaduna Refinery and Petrochemical Company  Limited – Commissioned sequentially between 1978 and 1988, with  installed capacity for refining 100,000 bpd • F lP Fuel Processing Plant – capable of processing 60,000 bpsd of Nigerian  i Pl bl f i 60 000 b d f Ni i crude into white petroleum products, namely LPG, Gasoline, Kerosene,  Diesel Oil and Fuel Oil • Lubricating Oils Processing Plant‐ designed to process 50,000bpd of heavy  crude oil imported from Kuwait or Venezuela, or Saudi Arabia Light Crude  into lubes base oils, waxes and asphalts. • Petrochemicals Plant (Linear Alkyl Benzyl Plant) • Utilities Production Plants • Manufacturing Plants g • Offsite Plants comprising tankage and oil movement 21/09/2009 Odujinrin & Adefuluestd. 1972 8
  9. 9. Refinery capacity problems Refinery capacity problems • Refineries have a total nameplate capacity of  445,000 bopdp – Insufficient to meet Nigeria’s demand of about 30  – 35 million litres per day even when fully 35 million litres per day even when fully  operational – currently operating at between 20 to 30 percent currently operating at between 20 to 30 percent  of capacity inspite of significant investments over  the years the years 21/09/2009 Odujinrin & Adefuluestd. 1972 9
  10. 10. Refinery capacity problems (contd.) Refinery capacity problems (contd.) • Refinery business previously operated as state  p y monopoly • Private sector operators were licensed in 2002  but very little progress but very little progress – All private licenses revoked in 2007 due to lack of  progress – Amakpe refinery license revalidated • Capacity not likely to exceed 12,000 bopd in the short  term 21/09/2009 Odujinrin & Adefuluestd. 1972 10
  11. 11. Policy solutions Policy solutions • What is government’s current policy solution? • How do we resolve the refinery situation? How do we resolve the refinery situation? – Privatisation? –DDeregulation? l i ? – Additional state‐led financing? – Other options? 21/09/2009 Odujinrin & Adefuluestd. 1972 11
  12. 12. Product distribution Product distribution • Currently the preserve of the Petroleum and  g p y Products Marketing Company which carries  out its functions through a network of  pipelines and depots pipelines and depots – Over 5,000 km of pipelines – 17 depots and 3 refinery‐based petroleum  d d f b d l product tank farms – 2 jetties and 1 export terminal • Operates as a monopoly Operates as a monopoly 21/09/2009 Odujinrin & Adefuluestd. 1972 12
  13. 13. Product distribution network  under the  PIB • PPMC & NGC pipeline and depot assets to be  p g transferred to a National Transport Logistics  Company • Product pipelines and depot assets to be Product pipelines and depot assets to be  divided into segments, to be managed by  facility management companies f l – Why?  y 21/09/2009 Odujinrin & Adefuluestd. 1972 13
  14. 14. Product distribution network  under the  PIB • Open access to: – Pipelines,  p , – jetties,  – import terminals import terminals,  – loading facilities, – Storage depots – “on commercially viable terms to be determined  y by the Authority”  21/09/2009 Odujinrin & Adefuluestd. 1972 14
  15. 15. Product Pricing Product Pricing • Pricing to remain regulated and shall be set by  PPRA • Will subsidies remain? • Sh ld b idi Should subsidies remain? i ? 21/09/2009 Odujinrin & Adefuluestd. 1972 15
  16. 16. Product pricing (contd.) Product pricing (contd.) • Petroleum Equalisation – Fund to remain under PIB for the purpose of: p p • Reimbursing petroleum products marketing companies  for any loss sustained by them solely and exclusively as  a result of sales by them of petroleum products at  uniform prices throughout Nigeria – Primarily funded by government subvention • A form of subsidy • Who benefits? 21/09/2009 Odujinrin & Adefuluestd. 1972 16
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