Refiners, NLC seek crude, lower prices amid 1.8mbpd output

Local refiners and organised labour have renewed calls for increased crude supply and lower fuel prices following confirmation that Nigeria’s oil production has risen to about 1.8 million barrels per day, saying higher output should translate into improved feedstock availability for domestic refineries and relief for consumers.

The spokesperson for the Crude Oil Refiners Association of Nigeria, Eche Idoko, on Sunday declared that refiners would intensify demand for more crude with the reported improvement in national production.

In a statement on Friday, issued by the Head of Media and Corporate Communication at the Nigerian Upstream Petroleum Regulatory Commission, Eniola Akinkuotu, the NUPRC said daily oil production had risen to 1.8mbpd, adding that it was eyeing 2mbpd.

Speaking in an interview with our correspondent, the CORAN spokesperson, Idoko, said the association would continue to intensify its demand for increased crude supply to local refineries.

Idoko said he read a report that the Nigerian National Petroleum Company Limited was planning to increase crude supply to the Dangote refinery in Lagos from five to seven cargoes. While commending the decision, he noted that seven is still low compared to what the refinery needs for daily production.

“We will intensify our demand for more crude. We heard last week that the NNPC intends to increase its cargoes to Dangote from five to seven out of the 14 that are required daily. We felt that was a welcome development, but of course, it hasn’t solved the problem. Seven out of 14 is still a far cry from what is available,” he said.

Idoko noted that rising production could help local refineries but stressed that adequate implementation of the domestic crude supply obligations remained critical. “So yes, while we say that increasing production would help, it is on the condition that the DCSO is effectively implemented as it’s supposed to be,” he added.

He expressed optimism that domestic refineries could receive more crude with increased output, noting that supply was possible even at lower production levels, but said the obstacle has been the failure to implement the domestic crude supply obligation due to unfavourable pricing.

“We’ve always been hopeful that with increasing production, they will get crude to local refineries, even at the volume we were doing before. At the volume we were doing before, we could still have conveniently got crude to local refineries. But the issue, again, is that the DCSO could not be implemented because we are unable to lift the cargoes due to the unfavourable pricing,” he stated.

The CORAN spokesman explained that consistent crude supply would improve refinery operations and profitability, noting that modular refineries would not make profits unless they get enough feedstock locally.

“If we get crude, of course, we will make gains; we have our cash flow. If we get regular products like we ought to do, yes, we would make gains. But without products, we are not making gains. If the oil producers give us feedstock, we will make gains. That’s how good the refining business is,” he said.

He added that improved crude supply would also benefit government revenues. “The Federal Government will make gains as well. The Federal Government will be able to come out to tell you how much it makes from the refineries that are producing now in the ways of taxes, levies, and charges,” Idoko said.

He added that pricing has been a major issue between producers and refiners, saying, “If I’m going to refine, I want to refine to make profits. For a modular refinery to break even, the pricing has to be reasonable.

In a situation where the price of crude goes as high as it is right now, it is not the most favourable one for a modular refinery.”