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Refining Nigeria’s Crude Oil

March 18, 2021


Refining Nigeria’s Crude Oil
Tunji Light Ariyomo
(May 13, 2016)

1. Over the past several years, there have been only two choices on the table:

i. To keep subsidy,
ii. To remove subsidy.

2. Removal of subsidy is the correct choice once only these two constitute the options. This is because Nigeria has no control over the principal metrics that determine cost of imported fuel. Once you peruse the PPPRA template, you are immediately confronted with the notorious fact that C+F (production cost and freight) jointly amount to N109.16 (at landing). The picture becomes clearer once this is situated within the context of dollar exchange rates and international crude-oil prices (and politics) which are completely outside the control of local economics.

3. HOWEVER, I am Olatunji Ariyomo, a proud Nigerian engineer. I am not Emmanuel Ibe Kachikwu, a first class lawyer and the Minister of Petroleum. My mind is primed differently and my friends and I approach solutions from a different viewpoint. Were I the Minister of Petroleum, none of items i and ii in paragraph 1 above would constitute my leading solutions to the Nigerian fuel and energy challenge. Upon appointment, I would have sought (and surely obtain) the approval of the President and Commander-in-Chief for me to lead an indigenous emergency science, technology and engineering revolution targeting a decentralized 450,000 barrel per day refining capacity locally. Yes, a revolution. A revolution that would see Nigerian engineers fabricating fractional distillation columns, heat chambers and furnaces, separation units, waste containment units, gas conversion units etc. A revolution that would see thousands of large and medium scale entrepreneurs become core investors in locally-built modular refining units. A revolution that would have seen thousands of Nigerian scientists and technologists becoming core operators in a new advance process control systems and new waste conversion and management schemes designed to ensure the refineries do not constitute public hazard. A revolution that would see Nigerian scientists and technologists become key players in a new job stream that targets quality assurance and compliance. The principal goal is to change the battle field and ensure that local metrics, controlled by local economics, determine and decide product prices in Nigeria. The goal would include ensuring that Nigeria within the shortest period possible is able to innovate by looking inward and commercialize the capability towards being able to serve local needs (development benefits) as well as begin to export finished products (economic benefits) and open a new frontier of foreign exchange earnings for the nation. One can only imagine the earning potential buried and hidden away from us simply because we are not a finished products’ exporter. We thereby effectively rob ourselves of direct and dominant economic benefits embedded in that spectrum of the petroleum value chain. Now the higher your export, the better your earning prospect and the stronger the ability of your currency to thrive competitively on an international scale.

4. Kindly do take note, that in the itemized priority for engagement, fuel importation that has been the overriding solution in the past decades as well as procurement and installation of foreign refineries, including modular refineries, upon which we have perennially depended on foreign companies for the required turn around maintenances, did not feature as core items.

5. The youths burning raw crude inside barrels in the Niger Delta in order to extract poor quality and potentially harmful products have common sense. What they lack is the requisite expert training and a compliance certification process that regulates their activities. On the surface, their ‘solution’ is more patriotic economically that the perpetual economic slavery that perennial importation represents.

6. I draw inspirations from successful development role models. In 1981, Mahathir bin Mohamad had an option, for Malaysia to continue on the usual path that IMF, World Bank etc favoured and continue to have China do everything for her. Mahathir chose a more difficult path – he looked inward. That was how he unleashed the incredible potential embedded in the Malaysian engineers and scientists. We all know where Malaysia stands today. This is 2016. ‘Know how’ rules the world. Nobody will give you. You take it – by force and deliberately.

7. I know that leadership continues to see Nigerian engineers as mumus. But some day. Some day.

Engr. Tunji Light Ariyomo (TLA)
You can follow the discussion at @olatunji.ariyomo
The author, a practicing engineer, who has, since 2016, served successfully as Superintendent of Ondo State Government power and utilities architecture says he still stands by his 2016 opinion on the subject matter.
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