Downstream oil sector dealers mentioned that competition is about to heat up, as local refiners will need to lower their prices to attract customers.
This update came on Monday after the Nigerian National Petroleum Company Limited revealed that the WRPC in Delta State, which has a capacity of 125,000 barrels per day, is now operational.
Additionally, NNPCL shared plans to kick off the export of locally refined products to international markets in exchange for foreign currency.
The recent development follows closely on the heels of the operational launch of the Port Harcourt Refinery in Rivers State, which has a capacity of 60,000 barrels per day, just a month ago.
During a facility inspection on Monday, Mele Kyari, the Group Chief Executive Officer of NNPCL, indicated that the purpose of the tour was to demonstrate to Nigerians the progress made thus far.
In his remarks to the visiting team, which included Farouk Ahmed, the Chief Executive Officer of NMDPRA, and Pius Akinyelure, the Chairman of the NNPC Board, Kyari acknowledged that while the repairs at the facility are not yet fully completed, refining activities have begun, with an emphasis on producing straight-run kerosene, diesel, and naphtha.
In a statement marking this achievement, President Bola Tinubu noted that the facility is currently operating at 60 percent capacity, equating to 75,000 barrels per day.
Kyari mentioned, “We are taking you through our plant. This plant is running. Although it is not 100 per cent complete, we are still in the process. Many people think these things are not real. They think real things are not possible in this country. We want you to see that this is real.”
He pointed out that restarting the Warri refinery will enable the country to become a net exporter of petroleum products, with some of these products heading to the global market.
“Secondly, this plant had three stages; we have started plant one, which we call Area One. It’s able to produce AGO (diesel), kerosene, naphtha, and a blend of crude oil. These are high-grade quality products that are required in the country, and we may need to export them. So this will give us cash, this company will make money and the promise of Mr President that this country must be a net exporter of petroleum products is already happening. Some of these products will go into the international market.
“Most importantly, I must put on record that Mr President believes that we can get this to work and get them to start and gave us the charge that we must start all three refineries. It’s already happening; we have started the 60,000 barrels per day refinery, and Area One of the Warri refinery is already working. Other plants that would produce PMS are being streamed and they would also come alive.
“Lastly, the Kaduna refinery is also on stream. We are not going to give you a date, but we would surprise Nigerians as we did the other day, and Kaduna would start operations. We thank Mr President for supporting us all the way through. I must congratulate our team for their determination and extreme belief that this country can restart this plant. This has brought this result in collaboration with our contractors and our entire staff. I would like to thank them and appreciate them for making history and that it’s possible to start a plant that you deliberately shut down. It’s possible and we have proved it,” he added.
The National Operations Controller of the Independent Petroleum Marketers Association of Nigeria, Mustapha Zarma, indicated that competition within the downstream oil sector is set to increase significantly. He noted that this heightened competition is expected to lead to a reduction in the prices of refined petroleum products.
He said, “Certainly, there is going to be a further drop in prices once the facility starts pumping out products in large volumes. This is because there is going to be a lot of competition and the market will be driven by market forces at the end of the day.
“We want to commend the efforts of the government and NNPC for making sure that the Warri refinery has started operating, and we encourage them to make sure all three refineries operate. Port Harcourt refinery earlier started operations, now Warri has started and we expect Kaduna to follow.
“With this development, we believe that the market will be driven by a lot of competition. And that competition at the end of the day will bring succour to the common man as a result of the further drop in fuel prices.”
The Chief Executive of NMDPRA, Ahmed Farouk, stated during his visit to the plant that the new refinery is expected to reduce the cost of petroleum products in Nigeria. He also mentioned that investors are in the process of constructing modular refineries that will provide advantages to the Nigerian populace.
“We thank God Almighty for yet another milestone. It’s been a very pleasing year 2024. We have seen our plants coming up. Last month, we commissioned the Port Harcourt refinery. Before that, the Dangote refinery was producing. Now we are in Warri refinery Area One, which we understand is producing products like naphtha, fuel oil, and AGO. And by the time the second part of it comes on, it will start producing petrol. We can still blend naphtha for the gasoline but when the other plants come on, it will be producing gasoline directly.
“It is important to note that this achievement is being enjoyed by the Nigerian public. For the first time in more than two decades, we are having the Yuletide without fuel queues and fuel all over the country. This is due to the determination of President Bola Tinubu to push the regulator and NNPC to come onstream.
“Investors are also coming in. We now have modular refineries around the country, and they are producing gasoline and kerosene. We only have to consolidate all of these to reflect on the pricing, which we expect to still come down. The regulator intends that prices should come down with the abundance of products available across the country for the betterment of the consumer,” Farouk said.
The NMDPRA boss continued, “We can see what some people termed as a price war; it’s not a price war but a competition for the market share. Both refineries are coming on and the importation of fuel to supplement whatever we have locally. We would now have the barometer to measure the price, and we believe that the price will still come down. And this is due to the abundance and availability of the product all across the country.
“I must also commend the NNPCL for their determination to ensure that the plants are already on stream and they are already working on the Kaduna refinery. This is an achievement for our country and we should not take it lightly. Our energy security is improving and it would reflect on the economy.” - PUNCH