National Summit On The Integration Of Artisanal/ Modular Refinery Operations Into The Oil & Gas Sector
OPENING REMARKS BY HIS EXCELLENCY, PROF. YEMI OSINBAJO, SAN, GCON, VICE PRESIDENT OF THE FEDERAL REPUBLIC OF NIGERIA, AT THE NATIONAL SUMMIT ON THE INTEGRATION OF ARTISANAL/ MODULAR REFINERY OPERATIONS INTO THE OIL AND GAS SECTOR ON THE 16TH OF MARCH, 2021
I am delighted to be a part of this Summit, on “Integrating Local Artisanal Modular Refineries to Nigeria’s Mainstream Oil Sector; the challenges, prospects, and deliverables for the Niger Delta and Nigeria.”
Over the last couple of years, the administration of President Muhammadu Buhari has been focused on growing the economy through infrastructural developments and improving our local content, especially in the area of oil and gas.
We recall how, in November 2016, in a move to address the concerns in the region, President Muhammadu Buhari met with Niger Delta leaders under the aegis of Pan-Niger Delta Forum (PANDEF). This led to the PANDEF 16-point demand to the Federal Government, which was subsequently captured in the Federal Government’s own 20-point agenda to develop the region.
Following this meeting, I undertook, on behalf of Mr. President, a tour of the oil-producing communities across the region to feel the pulse of the people and to better understand their demands, and also to consolidate our thoughts and ideas around the New Vision for the Niger Delta and to inform the people of the Niger Delta about this new vision.
The desire to provide solutions to key developmental issues led to the birth of the New Vision for the Niger Delta. This vision is hinged on the commitment of the present administration to develop the region and ensure that the people of the region benefit maximally from the wealth of their land. Indeed, the New Vision speaks to a progressive partnership between the Federal Government, State Government, private sector, and the local communities.
One of the nagging issues we were confronted with during my tour was how to deal with the proliferation of artisanal refineries and their attendant negative environmental impact. Our solution was to promote the establishment of modular refineries.
On February 13, 2017, the Federal Government announced the approval of modular refineries to drive the rapid development of the energy economy in the Niger Delta and expand the source of petroleum products supply in the country.
Subsequently, the Federal Government began issuing licenses to investors to build modular refineries. With the coming into effect of this policy initiative, we have witnessed the completion of several modular refineries in different States across the region. Some of them are awaiting the issuance of the License to Operate (LTO) by the Department of Petroleum Resources (DPR), to enable them commence refining operations. As of today, about 8 modular refineries are at various stages of completion.
We have followed this measure by creating the right environment to attract investment into that space. Today, we have in place, a zero-customs duty payment for the importation of modular refinery equipment. There is also an Intervention Fund with the Nigerian Content Development and Monitoring Board (NCDMB), with the mandate to support local content developments.
The Department of Petroleum Resources has developed a General Requirements and Guidance Framework for the establishment of modular refineries in Nigeria. Under this framework, provision has been made for artisanal refiners who wish to evolve their methods. These artisanal refiners will be seen as investors and considered for strategic equity partnerships with technical and financial partners.
The transition from artisanal refineries to modular refineries has been delayed because of the operators’ expectation that this process will be fully underwritten by Government. However, what this framework envisages is a private sector-led partnership with equity participation from the State Government or its agencies, registered local cooperative societies, and the integration of regional refinery stakeholders, with the private investor having majority equity. This is the sustainable model.
I believe that this summit will fashion a workable and viable blueprint that will guide and facilitate the integration of artisanal and modular refinery operators into the mainstream oil and gas sector.
We are confident that the integration of artisanal and modular refinery operations into the oil and gas sector will not only promote the inclusion of more local content in the industry; it will advance the use of home-grown technology in the refining of petroleum products and also curtail illegal activities in the Niger Delta region. This, of course, will be extremely salutary for all the environmental concerns that we have in that region.
It will also promote the availability of petroleum products, stabilize prices, eliminate shipping costs and provide employment opportunities for the young people in the region and Nigeria in general.
We recognize that with enough artisanal and modular refineries in the country, we should be able to conserve foreign exchange now utilized for the importation of petroleum products and promote socio-economic development. The resultant proliferation of employment opportunities will also have the effect of curbing youth restiveness which is largely driven by a dearth of socio-economic opportunity. With most of the young engaged in productive endeavours, the region will be able to turn a new page in its history.
Because this nascent industry of artisanal and modular refinery operators will be regulated; of course, the environmental degradation long associated with illegal refining activities, crude oil theft, and pipeline vandalism, will be mitigated and eliminated. In consequence, this initiative will, therefore, not only transform the economy of the Niger Delta; it has the potential to help transform the ecological conditions of the region as well.
One especially important issue that I hope this summit will address is that of crude. Currently, the artisanal refinery operators do not pay for the crude they refine. This crude is owned by the federation and it accounts for most of our foreign exchange as a nation, and one of the important revenue streams for our national budget.
I am, therefore, looking forward to the solutions on how this issue and other critical issues will be addressed by the key stakeholders.
I want to assure all the stakeholders in the oil and gas industry and all Nigerians that this administration is committed to facilitating the integration of artisanal refinery operations into the oil and gas sector immediately all the necessary presentations are concluded and forwarded to Mr. President.
It is my privilege and honour to declare this conference open and wish you all successful deliberations and look forward to receiving favorable feedback on the outcome of this summit.
Thank you for listening.