Downstream deregulation will facilitate local refineries, efficiency in oil and gas value-chain — Kyari

The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, says the deregulation of the downstream sector of the nation’s oil and gas industry will increase investment in the refining business and get more private sector players to build local refineries and promote efficiency across the entire value-chain.

He also advocated deeper collaboration among downstream players across the African continent to provide solutions to the challenges of substandard fuels.

Kyari spoke at the opening ceremony of the virtual African Refiners Association (ARA) Week 2020 with the theme: “Towards Cleaner Fuels for Cleaner Air.”

He said although the idea of price stabilization which led to the introduction of fuel subsidy in the 1970s was noble, it had become a huge financial burden on the nation’s treasury over the years thereby necessitating its removal in March 2020.

According to him, the move will not only free up much-needed cash to fund infrastructural development, but will also eliminate market distortion and foster competition among operators.

The GMD, who delivered a keynote address entitled, “Vision for the Downstream Sector on the Continent”, said increasing Africa’s refining capacity as well as quality of fuel required respective refineries to implement sustainable, coordinated pan-African solutions that would meet the target fuel specifications and thus protect the health and wellbeing of African nations and their citizenry.

“It is important to note at this point that the future of our continent does not just lie in our ability to unlock value from our vast natural resources or powering an industrial and economic revolution, but also in our ability to implement proven refining solutions that consider the broader public health implications of our business decisions,” Kyari said in a statement.

It was signed by the Group General Manager, Group Public Affairs, Dr Kennie Obateru and made available to Persecondnews.

He said NNPC was making concerted efforts to carry out holistic rehabilitation of its refineries in Port Harcourt, Warri and Kaduna, noting that it was also collaborating with relevant stakeholders to establish modular and condensate refineries as well as supporting private sector establishment of refineries.

“These projects will be in line with the AFRI standards of AFRI-4 specifications of 50 particles per million for diesel and 150 particles per million for gasoline by 2020, and AFRI-5 specification of 50 particles per million of sulphur in gasoline and diesel by 2030 respectively.

“Considering that revamp of petroleum products storage depots and associated pipelines is key to optimal operations of the refineries, the Corporation has decided to use a Build, Operate and Transfer (BOT) strategy to restore these facilities using private sector financing,” Kyari explained.

According to him, this process has progressed significantly as the process of partner selection was ongoing to ensure sustainability of the refineries post rehabilitation.

Kyari noted that Nigeria was intensifying the use of natural gas to ensure lower emissions, adding that natural gas has been identified as the fuel of choice for the future as it has the full credentials to support the achievement of the Sustainable Development Goals (SDGs).

The NNPC boss also disclosed that the outlook for the downstream sector both in Nigeria and across the African continent looks bright with attractive market conditions, large market, and significant crude distillation capacity additions from various refinery projects, and improvement of the distribution network and the use of natural gas.

He called on the refining professionals across the continent to utilize the abundant opportunities for strategic collaboration across the entire downstream value chain towards delivering value for the continent.

The Executive Secretary of ARA, Engr. Anibor Kragha, lauded the NNPC for its efforts to bolster the continents’ refining capacity, assuring that the association in collaboration with other stakeholders would support the corporation to achieve its noble objectives.