NNPCL To Save 367.2 Billion Naira Annually From Local Refining

The Nigerian National Petroleum Company Limited (NNPCL) has said Nigeria is going to save about N367.2 billion annually through the domestic refining of crude oil to petrol.

Naija News reports that the NNPCL Group Chief Executive Officer, Mele Kyari, stated this during a recent interview on Nigeria Television Authority (NTA).

He explained that the refining of crude oil into petrol in Nigeria would compress the logistics cost around petrol supply by about N17/litre, describing this as significant.

Kyari said NNPC supplies over 60 million litres of petrol daily to keep Nigeria wet with the product, saying that an N17/litre reduction in logistics cost would translate to N1.02bn savings daily.

He stated that based on this, Nigeria is going to save over N367 billion annually once the country starts producing petrol domestically from Dangote Refinery, as well as the country’s refineries under the management of NNPC

The NNPCL boss also stated that efforts were ongoing to get the Port Harcourt and Warri refineries ready in the first half of this year.

He, however, pointed out that the local refining of crude would not warrant a massive crash in the cost of petrol, though there would be some gains in price with respect to logistics.

He said, “This understanding that once you start local refining prices will crash, this is not so. It is very unlikely to play out that way because firstly, crude oil will continue to be the major feedstock for every refinery. 70 per cent of your operation cost always comes from crude, as your feedstock, and this is priced at the international market.

“However, two things will change when we start local refining. It gives you the security of supply. Now, when you place an order, it takes you 14 days to get these (petroleum) products from Europe into our country and that can be a matter of concern.

“Any glitch with weather, war situation, or something happens, you’ll run into trouble, but once you’re producing locally, the products become very close to you and the issue of energy security becomes much more assured.”

Secondly, Kyari said the in-country refining of crude “reduces the logistics cost, because for you to move products from Europe to Nigeria, probably it is going to cost you about N21/litre today.”

Kyari added, “But when you bring it closer home, you are probably going to need N7 or N8/litre to move it from one location, all things being equal.

“So it is going to compress your price in today’s context, maybe by N17 or so, and that N17 is quite significant. But more than anything, it gives you the security of supply because these products will be closer.”