Base Oil Revival in Nigeria Derailed


Six months after it opened, following a two-year closure, the Kaduna Refining and Petrochemical Co. has been closed again.

The subsidiary of Nigerias national oil company, which also includes the countrys only base oil plant, closed after vandals damaged its pipelines.

Pipelines supplying crude oil from Nigerias oil-rich Niger Delta region to the countrys three refineries have become targets of vandalism by oil thieves and restive youths in recent times.

Nigerian authorities are worried about the latest damage, which took place in the Chanomi creeks, more so as it came at a time of great expectations of the refinery returning to optimal production level.

Nigerias President Umaru Musa YarAdua, who had made a priority of returning the Kaduna Refinery to its past glory, quickly responded by approving the sum of U.S. $7 million to local contractors for the repair of the damaged pipelines.

Before the recent closure, the Kaduna Refinery was producing between 60 and 70 percent of its installed capacity, with overall refining production of the country standing at 30 percent of capacity.

The recentdevelopmentalso shocked industry watchers as the base oil plant came back on stream only in July, two weeks before the activation of a fluid catalytic cracking unit designed to help the refinery achieve its optimal production capacity. The base oil plant has capacity to produce 110,000 metric tons per year of API Group I base stocks.

Only recently, the Nigerian authorities also took what many consider as bold steps to address youth restiveness and militancy in the region, a situation believed to have been responsible for frequent attacks on the pipelines.

A separate government department was created to cater to the developmental needs of the regions people, who have long complained of being marginalized and who seekcontrol of the oil found in the region.

Not many industry watchers, however, believe that vandalism alone is responsible for pipeline damage in a country that places little attention to maintenance of facilities.

General Secretary of the National Union of Petroleum and Natural Gas Workers Elijah Okougbo told Lube Report that corrosion and rust could also lead to the blow-out of the pipelines because most of the pipelines have not been replaced or maintained since they were laid many years ago.

The impact of the closure is no doubt enormous as Nigerian authorities now spend between $3 million and $6 million per day on the importation of petroleum products to meet local requirements. Lube blenders also recall with nostalgia the relief they had when the base oil plant was fully operational and supplying the domestic market. They therefore look forward to the reopening of the base oil plant with time.

Yinka Adejumo, product developmentand technical services manager for Conoil Plc, said there would be tremendous advantage for the base oil plant coming back on stream as soon as possible. Conoil has a blending plant in Lagos with capacity to produce 40,000 tons of lubricants per year and is on the verge of completing another plant in Port Harcourt.

First [there] is the effect its going to have on the labor market, Adejumo said. Secondly, logistics is a big issue in base oil acquisition. If we can source base oil locally at the Kaduna Refinery and meet the demand of the market, it will save us a lot of foreign exchange that we are spending on importation.

Meanwhile, the long-awaited turnaround maintenance of the Kaduna refinery was expected to commence on Nov. 15. The comprehensive maintenance exercise, the seventh since the company started operation in 1988, is to last 60 days. According to industry sources, such turnarounds should be carried out every two years. This has not been the case in Nigeria, however, a situation that led to the breakdown of the refinery for about eight years.

Olayinka Agoro, the refinerys managing director, has nonetheless assured that the forthcoming exercise will be extensive and will involve the participation of experts from different countries. In June, the Nigerian government awarded the maintenance contract for the refinery to Hungary-based DKG East ITC Sea Oil and Gas Engineering.

Nigerian National Petroleum Corp. Group Managing Director Abubakar YarAdua had also expressed confidence that the Kaduna Refinery was on its way to restarting soon.

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