Edo Refinery Faces Crippling Crude Shortage Amidst NNPC Delays

AIPCC Energy Limited, the operator of the Edo Refinery and Petrochemicals Company Limited, has sounded the alarm over a persistent lack of crude oil supply, despite being a fully operational facility with the capacity to process 1,000 barrels per day. The refinery, located in Ologbo, Edo State, has been severely hampered by bureaucratic delays and inefficiencies, leaving it unable to operate at full capacity.

On Saturday, the refinery’s management expressed deep frustration that, despite President Bola Tinubu’s directive for the Nigerian National Petroleum Company Limited (NNPC) to supply crude oil to modular refineries, including the Dangote Refinery, the Edo Refinery has yet to receive any crude.

Segun Okeni, a representative of the company, revealed the dire situation facing the refinery. “This is to raise an alarm on the persistent lack of crude despite being a fully functional 1,000 barrels per day stream crude oil refinery,” Okeni stated.

Despite existing crude oil supply agreements with Seplat and ND Western since 2022, Okeni explained that bureaucratic obstacles have prevented the refinery from accessing the necessary crude to operate effectively. The company’s pleas, including a 2021 letter to NNPC’s Group Chief Executive Officer, Mele Kyari, have gone unanswered, despite several meetings and continuous communication.

Okeni detailed the timeline of their efforts: “On August 18, 2021, our team, led by our chairman, met with the NNPC CEO and its top management team to discuss our intention to buy crude oil from NNPC. We immediately followed up with a letter seeking crude supply, dated July 22, 2024. In July 2022, NNPC representatives visited our facility for site inspection and to confirm the mechanical completion of the Edo refinery.”

Further attempts to secure crude were made, including a commercial negotiation meeting with NNPC in September 2022 and subsequent correspondence identifying potential oil fields for crude offtake. Despite these efforts, no progress has been made.

Okeni expressed concern over the impact of these delays on both local and foreign investment in Nigeria’s oil sector. “If we, the local investors, can’t get crude even as small as we are, how can foreign investors be encouraged to invest in the country?” he questioned, pointing out that the daily demand of all modular refineries combined is less than two per cent of Nigeria’s daily crude oil production.

The management also proposed practical solutions, urging NNPC and other crude oil suppliers to establish loading infrastructure to facilitate truck loading. This, they argued, would make modular refineries more competitive than offshore refineries, ultimately benefiting Nigerian consumers.

Okeni warned of the broader implications for Nigeria’s economy, noting that the Edo Refinery is currently operating at less than 10 per cent of its installed capacity due to the crude shortage. “Nigeria loses millions of dollars following the inability of NNPC to supply crude to modular refineries over the past three years, whose total installed capacity is less than 30,000 barrels per day,” he lamented.

The ongoing struggles of the Edo Refinery highlight the critical need for reform in the oil sector to support local investment and ensure the efficient functioning of Nigeria’s modular refineries. Without immediate action, the potential for growth and development in this sector remains severely undermined.