Chairman, OPAC Refinery, Mr Momoh Oyarekhua, has called on the government to support increased local refining, which he said is key to alleviating the post-COVID-19 economic crisis.
He said the sudden but sustained drop in the price of crude oil in the international market due to fall in demand following the coronavirus pandemic has necessitated the need for increased local refining.
According to him, the demand collapse was worsened by lack of storage capacity to take up excess supply by major buyers around the world.
Therefore, there is need for more investment in local refining as a way out of the economic conundrum and to ensure that the country remains resilient post-COVID-19 and beyond.
By encouraging and increasing local refining, Nigeria saves itself the embarrassing situation of chasing crude buyers around the world, and can also eliminate the importation of premium motor spirit (PMS) and other refined products thereby helping the country cut its foreign exchange exposure, he added.
Oyarekhua said: “We can save a lot of foreign exchange which will be utilised to fund other important sectors of the economy, which will mean that, as a country, we will not be heavily exposed to the international crude or currency politics.
More investment is needed to increase our local refining capacity and the government should provide specific ‘target framework’ to further support and encourage local investors to ensure we produce enough for our local consumption and even for export to earn more foreign currencies while creating jobs.”
On the damage done by coronavirus and the price war between Saudi Arabia and Russia, which made oil fall as low as $10 per barrel, Oyarekhua stated that government increasing and doubling support for local refineries will further reduce the hardship faced by some of the players in the downstream sector, achieve better consumer-friendly pricing for PMS (petrol) and other refined products.
We must boost the capacity of our local refineries and scale the modular refineries to meet the challenges of the future and also sustain the gains we have made in the oil and gas industry.
Oyarekhua said because of Covid-19, “we have been in full lockdown for the past five weeks. The lockdown has been relaxed a bit, although we still advised our staff to remain at home. We do the best we can from home to look after our business, but the situation is not optimal. This delayed the test round for OPAC (Omsa Pillar Astex Company) modular refinery, which was scheduled for operation by the end of March.
“We are waiting to see what measures the country is putting in place to ameliorate the current challenges and to see if those measures fit into our business model and allow us to schedule a new test round for the refinery.
On the other hand, some other important parts of the refinery that were also meant to be integrated got delayed because the related expatriate could not travel to Nigeria due to port and airport closures.
“As of today, the modular refinery is about 98 per cent complete. We have some of our technical staff living at the refinery in isolation and doing some work, but the automation and control system will need expatriate input to be integrated, so that could not be done yet. If the situation normalizes, we should be able to complete the installation of the refinery in no time”.