Nigeria plans to refine crude oil abroad
By Yakubu Lawal, Deputy Energy Editor

NIGERIA is set to refine its crude oil abroad. For now, the Federal Government is focusing on offshore refineries in Eastern Europe.

Through the Nigerian National Petroleum Corporation (NNPC), the government has kicked off talks on how it can secure partnership with the refineries to boost its downstream investment profile.

General Manager, NNPC London Office, Uthman Mohammed, said the corporation had started preliminary discussions with some refiners in Hungary and Romania.

Mohammed, who is the National OPEC Representative, told The Guardian at the weekend that the proposal was now before the NNPC management and the Minister of State for Energy (Petroleum Matters), Mr. Odein Ajumogobia, for approval.

He said the London Office of the NNPC had been re-positioned to explore investment potential across the globe and had advised the headquarters for action.

Mohammed explained that the idea was to bring Nigerian crude to those refineries and refine it and sell same in the international market having added value to the product.

He said in doing so, Nigeria would make more money from the refined crude since value would be added to the product.

He said the NNPC was not considering outright purchase of such refineries but that it would enter into partnership with their operators such that the final product could stimulate investment in retail outlets in the United Kingdom (UK) and other European countries.

Mohammed said in line with NNPC's new policy, the London office was also exploring the possibilities of acquiring filling stations in the UK, adding that the unit had the resources to finance the venture.

The NNPC boss disclosed that over $3 billion (about N351 billion) would be saved yearly as expenditure on fuel subsidy by refining Nigerian crude oil in Eastern Europe.

"With such offshore refining arrangement, subsidy at home can easily be offset. For instance, today, a litre of petrol in London is one pound, 10 pence, about N270 at current exchange rate while at home, petrol sells for N70 per litre at the pump. You can imagine how much savings can be made from refining our crude oil in Europe and cushioning the impact of subsidy at home," he said.

Mohammed also explained that his office was driven by a new policy in the NNPC, which encourages all its business units to be enterprising, which he added was in line with the ongoing reforms in the oil and gas industry.

"There is a new policy in the NNPC which empowers the various business units to identify new opportunities and generate revenue in line with the planned re-organisation of the oil and gas industry. Corporate Commercial and Investment unit has been set up in the NNPC this year to identify and pursue investments.

"When we acquired this London office in 1994, it cost us �2 million and today, it is worth more than �10 million. This can be used as collateral to secure loans for any of our businesses. But of course, we need clearance from our corporate headquarters. We have received several overtures from banks here.

"However, when we decide on any business venture and develop it up to a point, we would invite Corporate Commercial and Investment to come in and take over," he said.

Mohammed stated that the initiative was not novel, adding that the diplomatic face-off between Nigeria and Britain in the 1990s under the late head of state, Gen. Sani Abacha, which caused the London office to relocate to Paris, dislocated the smooth operations of the NNPC abroad.

"By the time we relocated to London, we were reduced to just providing protocol services and market intelligence. Now, we are trying to grow beyond that to emulate our Libyan counterparts," he said.

Mohammed said that plans had been concluded to house the Brass LNG in the NNPC London Office as tenants, including the NNPC shipping company, NIDAX, an NNPC/Daewoo joint venture.

The London office, he said, had saved over $2 million (about N234 million) from 2006 till this year, procuring project materials on behalf of the NNPC.