Placing Egbogah’s ‘advice’ in proper perspective
The Editor of the Guardian Newspaper attributes this and many other erroneous statements to the respected former advisor on Petroleum. We believe he was misquoted.
Nevertheless the level of ignorance and falsehood peddled in that article cannot be allowed to go unchallenged lest they find their way into our national history books, misinform future generations of our people and scandalize the memory of all those brilliant and patriotic Nigerians who were involved in the conceptualization, approval, implementation and operation of that strategic national asset. To say that Kaduna refinery was designed and built to refine only imported crude oil is an insult to everyone associated with the original vision of the refinery. These are men who between 1974 and 1992 made NNPC the integrated oil corporation it is today.
What is the correct basis on which the Kaduna refinery was built?
Total capacity of 100,000 bpd, commissioned in 1980 and consisting of:
Fuels Plant of 50,000 bpd capacity for local crude oil (Escravos and/or Forcados-Naphthenic)
Lubes Plant of 50,000 bpd capacity for foreign Paraffinic crude oil for the production of lubricating base oils, asphalts and waxes.
The fuels plant was expanded in 1986 to a capacity of 60,000 bpd, bringing the total refining capacity of the refinery to 110,000 bpd. Any visitor to the plant will see two imposing crude distillation units not one In 1988, a Petrochemicals annex to the refinery was commissioned, for the production of 30,000 tons per year of Linear Alkyl Benzene (LAB) for the detergents industry, a number of industrial solvents, dielectric (transformer) oils, and lubricating oil additives
The designers of the Kaduna refinery project saw the possibility of extracting benzene from the highly Naphthenic naphtha cut of the Nigerian crude oil and Alkylating it with the long chain alkanes from the kerosene cut obtained from the paraffinic (foreign) crude oil.
NNPC at that time was able to do more than just collecting rents from E&P companies. The Kaduna refinery of the 1980s and early 90s, even with an analog control system, was a source of raw materials for several other industries.
• That the requirement of foreign crude oil supply for the Lubes Section of the refinery is a fatal flaw that
makes its operation uneconomical. One only needs to note as follows:
Only few countries on earth are self-sufficient in crude oil; the rest, including most industrialized countries, have to import their crude oil requirements. Yet they still move on with the business of refining for their local needs. Japan, Singapore, Germany, Ghana and South Africa, to mention just a few, import virtually all their crude oil needs, while Singapore is a major exporter of refined products.
Imported crude oil for Kaduna refinery (Lagomar from Venezuela, Arabian Light from Saudi Arabia, Basra from Iraq, Urals from Russia) has always been by swap arrangements in exchange for Nigerian crude oil grades, which are of higher value, being light sweet crude. So we get higher volumes in exchange for the crude we give out.
When Nigeria eventually industrializes, she will be a net importer of crude oil. Shall we then stop refining?
• The Kaduna refinery still uses outdated analogue control systems, and this is another fatal flaw.
All refineries in the world built before 1980 installed analogue control systems (including Warri & Old Port Harcourt Refineries). The difference is that the owners and managements of such refineries have found the will and the diligence to upgrade or change-out such old systems to new digital (DCS) systems, which are themselves subject to upgrades, as technologies improve. NNPC first embarked on the mission of upgrading Kaduna Refinery control systems in 1992. Since then, the lack of corporate will and resolve (and wrong priorities) have made this vital project a mirage thus far.
• That Kaduna Refinery is “Old”!
This is another bit of popular ignorance: the notion that refineries can be old is a misconception that afflicts the uninformed layman. Your refinery can only be as old as you allow it to be, through falling behind on necessary maintenance, replacements, upgrades, modifications and expansions. Every refinery is an aggregation of thousands of individual equipment, each of which can be replaced when it proves too old to function optimally. Refineries are thus supposed to be continually renewed, piece-meal on an on-going basis and thus maintained in a “new” and modern condition, if only the will and the diligence can be found. The following examples illustrate this fact:
The “youngest” complex refinery in the US, the Marathon Refinery in Garyville Louisiana, was commissioned in 1977 at a capacity of 200,000bpd. Today it has since been expanded to a 522,000bpd (exceeding Nigeria’s domestic refining capacity of 445,000bpd). The majority of complex refineries of the US were built before 1965, with some as “old” as 100 years. Yet these “old” refineries are amongst the most modern and efficient in the world today, incorporating the most advanced technologies.
The Abadan Refinery in Iran was first commissioned in 1912 (yes 1912, a hundred and three years ago!). It reached its peak capacity of 635,000bpd in 1980, and was then the largest refinery in the world. The Iraqis largely destroyed it in September 1980 during the Iraq-Iran war. Since that war ended in 1988, the refinery’s capacity has been recovered to 429,000bpd (nearly matching Nigeria’s combined capacity).
Considering the foregoing, scrapping one refinery to build another doesn’t make any sense, and would constitute an egregious waste of the nation’s resources.
The only real challenge to Kaduna Refinery is the adequacy and reliability of crude oil supply for its optimal and profitable operations. With prudent management and adoption of the right priorities, NNPC itself can generate the funds required for the revamp and expansion of its refining and other assets. This would serve the nation much better than its current retreat to being a mere rent collector from the E&P companies.
• Iheanacho, an oil and gas expert/Chairman, Enercon Nigeria Limited, Lagos.