OPINION

All You Need To Know On The Kastina Refinery, By Friday Nwosu

Propelled by the desire to encourage cross border economic development, Nigeria and the Republic of Niger recently signed a Memorandum of Understanding (MoU) for the construction of a hydrocarbon pipeline and a petroleum refinery.

The pipeline is to be constructed from Niger to a border town in Katsina State, Nigeria. The new refinery would process up to 100,000 and 150,000 barrels per day of crude from Niger Republic.
The choice of Katsina was informed by its short distance to Niger, a factor that would lower the pipeline distance and cost of construction.

President Muhammadu Buhari, shortly after signing of the MoU, inaugurated a steering committee for the projects which is to be co-chaired by Nigerian and Nigerien ministers. Buhari also inaugurated a separate team led by Nigeria’s Engineer Rabiu Suleiman, supported by the Director General Hydrocarbon of Niger Republic, to develop the implementation roadmap and strategy for both the refinery and pipeline projects.

The two committees are expected by December 2018 to come up with a detailed roadmap and guideline leading to actual execution of the projects. The roadmap would cover bankable feasibility studies for the refinery and pipeline projects, optimal project site, pipeline routes and details, security plan and selected consortia of investors for both the refinery and pipeline projects.

The projected duration for completion of the projects is put at between three to four years.

The signing of the MoU and subsequent inauguration of the two committees has continued to elicit questions from Nigerians. The questions have largely been raised about the level of government involvement, the funding for the project, crude supply from Niger and security issues in the region.

WHERE IS THE FUND COMING FROM?

So far, the estimated cost of the refinery and pipeline projects remain unclear as it would only be determined by the outcome of the technical study of the committee.

However, a Nigerian investor, Alhaji Ibrahim Zakari, said about $2 billion would be needed for the construction of the refinery. Zakari announced that his company, Blak Oil Energy Refinery had mobilized substantial part of the $2 billion needed for the construction of the refinery.

“The funds are coming from abroad, US, Canada, India and the Middle East,” he said.

It is instructive to note that the project will be private sector driven with the full support of the governments of both countries, Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, also said, explaining that almost nothing of both governments’ funds would be put in the projects. According to him, about 50 investors were at the MoU signing at the State House to observe the processes and firm up their initial expressions of interest.

CRUDE SOURCE

Questions have also been raised about the volume of crude supply from Niger Republic for the proposed refinery that will have capacity to process between 100,000 and 150,000 barrels of crude per day.
Kachikwu said the landlocked West African country currently produces “enough to support about 60-70,000 barrels per day but lots of fields that have been capped will be opened (with the coming of the new refinery.)”

Moreso, China National Petroleum Corp (CNPC) has ramped up Niger crude output to nearly 70,000 barrels per day this year from under 20,000 barrels, according to Niger’s statistic agency Institut National de la Statistique du Niger.

The Nigerien authorities have also assured that there is ongoing plan to expand crude oil production to about 90,000 barrels per day as the refinery project comes on stream.

HOW WOULD NIGERIA BENEFIT?

The project when completed is expected to provide job opportunities for more than 2,500 Nigerians.

Buhari while speaking on the benefits of the projects said the initiative will not only provide a reliable market for the stranded crude from Niger Republic but will also provide petroleum products for Nigeria, as the country “aggressively pursues its aspiration on petroleum product self-sufficiency”. He also expressed hope that the current frontier exploration efforts in the Northern part of the country (Chad Basin, Gongola Basin, Sokoto Basin, Bida Basin and Benue trough) would also result in the provision of additional hydrocarbon inflow to the corridors of the proposed pipeline and a potential refinery around Kaduna axis.

The general benefits to be derived from these projects by both countries are enormous, Kachikwu said. He said other similar projects getting government support across the country include the Agip refinery for which studies are ongoing in Bayelsa State.

“You have the Port Harcourt refinery which when we finish refurbishing it, will cover the South South and South East. The Warri and Kaduna refineries are all there including the Dangote in Lagos.

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