The federal government and Nigerian Agip Oil Company (NAOC), a subsidiary of Italy’s ENI, have struck a deal to construct an unbelievable $15 billion refinery in the Niger Delta. The deal will also include Agip’s investment in a power project.
In this regard, officials of Agip held a meeting with acting President Yemi Osinbajo in the Presidential Villa, Abuja, on Tuesday with a view to opening discussions on the proposed investment.
The meeting agreed on the need to prepare a Memorandum of Understanding (MoU) for the construction of a 150,000 barrel per day (bpd) refinery by Agip in the Zabazaba field, located in Oil Prospecting Lease (OPL) 245.
However, the $15 billion announced by the government for the refinery and power project raised eyebrows among industry observers who wondered why a mid-sized refinery and thermal power plant would gulp that kind of money.
In comparison, they said the 650,000bpd refinery complex, including fertiliser and petrochemical units, being built by the Dangote Group at the Lekki Free Trade Zone in Lagos, is costing $9 billion.
The meeting, which had in attendance the Minister of State for Petroleum, Dr. Ibe Kachikwu, also discussed Agip’s assistance to Nigeria in the repairs of the Port Harcourt refinery.
Speaking with journalists after the meeting, Kachikwu said the deal is aimed at discouraging oil companies operating in Nigeria from continuous fuel importation and encouraging them to refine oil locally.
Kachikwu said the deal was in pursuit of the federal government’s commitment to increase capacity for local production and consumption of petroleum products with a view to ending fuel importation in Nigeria within a scheduled period.
“We just finished a meeting with the acting president and Agip. In the meeting, we dealt with the issue of Agip’s investment in the Zabazaba field and their cooperation with us in the repairs of the Port Harcourt refinery.
“We reviewed, following my meeting with Agip, an agreement that the firm will build a brand new refinery of 150,000 bpd capacity which will be located in Port Harcourt or Brass.
“They have accepted and are preparing a memorandum of understanding along this line. The effect of this is that oil companies operating in Nigeria will begin to migrate from only exporting crude and begin to look at how to start refining crude so that we will be able to meet our local consumption.
“With this new refinery and along with other things, what we are going to do with the refinery in Port Harcourt gives us hope in our quest to try and increase our local capacity to produce the refined products we need in the country and to meet the timeline of 2019.
“We are now going ahead to work out the modalities with Agip. I am also calling on other multinationals to see what they can do along this line.
“In the area of power, Agip has the second largest plant which will be on stream by 2020. This is to make sure they are not only just taking away crude but have other local investments.
“Total investments in the area of power and the refinery from Agip will be in excess of $15 billion,” Kachikwu said.