The Minister of State for Petroleum Resources, Dr. Ibe
Kachikwu, has urged the Dangote Group to expedite work on its crude oil
refinery to enable it to come on stream before the end of 2019.
Kachikwu stated this on Monday in Lagos during his visit to
the site of the Dangote refinery.
Earlier, the President/Chief Executive, Dangote Group, Aliko
Dangote, had said the refinery would have the capacity to refine 650,000
barrels of crude oil per day.
“We are currently building the world’s largest single line
refinery and petrochemical complex, and the world’s second largest urea
fertiliser plant,” he told the minister.
He said the company would also be building the largest
sub-sea pipeline infrastructure anywhere in the world, with a length of 1,100
kilometres, to handle three billion standard cubic feet of gas per day.
Dangote said the gas from the pipeline would augment
domestic gas supply, adding that an estimated 12,000 megawatts of power could
be added to the grid from the gas system.
“We will be adding value to our economy as all these
projects will be creating about 4,000 direct and 145,000 indirect jobs. We will
also save over $7.5bn for Nigeria annually through import substitution,” he
noted.
Kachikwu, who commended Dangote for embarking on the
project, said, “The challenge I give you as I leave here today will be one of
time. I see your timing in terms of December 2019.
“But I am sure you will understand if I tell you that the
refinery component should come earlier. I have made very frank commitment to
Nigerians that I must exit importation of petroleum products by 2019, and I am
going to keep to it. Please, continue to push the envelope and see how we can
do this.”
The minister urged Dangote to tell his engineers to go back
to the drawing board and try to make the refinery come on stream earlier than
the end of 2019.
“Where do we come in as government? I think the first thing
is that we must look seriously at whatever incentives this business needs. You
cannot be investing $14bn in a country without sufficient incentives to drive
the business,” he stated.
Earlier at the Nigeria Annual International Conference and
Exhibition organised by the Society of Petroleum Engineers in Lagos, Kachikwu
said the country would have to halt oil production if the cost of producing the
commodity remained stubbornly high.
He said the country was being left behind by its peers that
had dramatically reduced their cost of production.
“When you look at the cost of production in Nigeria, it
remains blatantly high. Our cost per barrel today is about $27 per barrel for
JV (joint venture) fields. In Saudi Arabia, it is about $9. So, we are way
apart in terms of cost that anything that happens will hit us very hard,”
Kachikwu said.
He explained that countries in the Arab world had cut costs
drastically, describing them as the lowest-cost producers in the world.
“Even though we have been singing over the last two years
that we need to drive cost down, the current figure that I still have showing
me the numbers of last year has not shown me a major reduction in the cost of
production,” the minister said.
He added that the government would compel a reduction in the
cost, because “there is no way this country will produce oil at this sort of
swelling prices that we see; there will be no margins left for this country.”
According to him, only oil companies that are able to drive
down costs will have a footage in Nigeria.
Kachikwu stated, “For me, you rather leave the oil in the
ground than produce at a cost that doesn’t make sense. So, cost is going to be
a very high driver. So, that is certainly one area we are focusing on; we are
working collaboratively with oil companies.
“But let’s make no mistake about it: If we cannot negotiate
it down, we will compel it or we will stop the production; it does not make any
sense.”
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