Osinbajo and the Politics of Modular Refinery in the Niger Delta – Leye Akinmodiro

Earlier in the year when Vice President Yemi Osinbajo held forte as the Acting President of Nigeria, one of the key strategies he abundantly employed to douse militant agitations and restiveness in the oil-rich Niger-Delta was the promise of modular refinery. According to Professor Osinbajo, Nigeria would legalise currently outlawed illegal refineries in the Niger Delta oil hub, replace them with modular ones by the end of the year and, supply them with crude at a reasonable price.

Professor Osinbajo further emphasized that each of the Niger Delta states would receive two modular refineries to start up in the fourth quarter, a novel development the people and leaders of the region applauded with unbridled joy.

Reflecting on one of such meetings, Chief Edwin Clark, head of the community leaders, remarked as follows: “The meeting was excellent. We met with Mr Acting President and the discussion was very honest, truthful, and forthright. We are very, very satisfied. No more ultimatums”.

35 applications had so far been received from various investors in response to this policy objective. The Senior Special Assistant to the Vice-President on Media and Publicity, Mr. Laolu Akande, recently disclosed this in a statement in Abuja on the New Vision for the Niger Delta.

Out of the 35 applications, Akande said 13 had reached what he called the Licence to Construct stage. “Two out of these 13 refineries are almost ready for shipment. Consideration for Customs duty waiver and some form of tax holiday are also underway,” he said.

He listed the objectives of establishing modular refineries in the Niger Delta region to include creation of a robust domestic refining sector necessary to meet and exceed the full capacity of national demand, addressing the proliferation of illegal refineries in the Niger Delta and the attendant environmental degradation, and to provide jobs for unemployed youths in the region.

As welcoming as this policy might sound, analysts in energy matters and political economy are raising concerns on the sincerity of government to faithfully commit itself to the promises made and the potentials the policy truly has in achieving the ultimate goal of lasting peace in the region. There also anxieties over how much the people of Niger-Delta will be allowed to benefit from this latest policy drive considering the volatile and lop-sided politics that usually attend oil business in Nigeria.

For example, questions are already being asked on how many of the applications being considered are from the investors from the region. Feelers from reliable sources are of the suggestion that majority of the already licensed investors in the business of modular refinery are from outside the region, a development not different from allocation of oil well licenses, another highly volatile issue in Nigeria oil politics.

Modular refinery, sometimes also referred to as mini-refinery, is typically a small refinery that fractionates less than 5000 barrels of crude oil per day by atmospheric distillation. It is built in sections or modules so that it can be easily transported or relocated. One of its major advantages is the ease, speed and cost of construction compared to large-capacity refineries such as the Port-Harcourt refinery. Typically, the EPC cycle of a modular refinery can take between 12 to 18 months to complete as against about 8 to 10 years it takes high-capacity refinery and of is much less financial burden. The wisdom of modular refinery as a viable economic policy cannot be over-emphasized especially for a region abundantly blessed with crude oil and where there already exists a large pool of highly resourceful persons in traditional oil refining process, only waiting to be properly trained in the modern technology that support modular refinery.

A good number of youths from the Niger-Delta region engage in what has been termed illegal refinery which gets its supply from crude oil bunkering. These youths argue that they are forced into this business since the massive pollution caused by the oil exploration of the multinational oil corporations has destroyed their traditional businesses and livelihoods of fishing and crop farming. The criminal neglect of Nigerian government and the oil companies in the CSR duties, scarcity and high costs of petroleum products in the Niger Delta areas, especially the riverine areas where explorations are heaviest, are also some reasons advanced by the people of the region as responsible for the proliferation of the bunkering business.

One of the ex-militants, Sholuro Enyengho, who has benefitted from the Amnesty programme of training, wonders why oil exploration process and modular refinery technology, rather than photography and film-making, are not  included as part of the training programmes of the Amnesty exercise. He argues that most of these youths are versed in the techniques of building artisanal refining units.

Artisanal unit is a simplified petroleum distillation unit conceptualized like a basic school science project. It can also be likened to the production of the local dry gin commonly called “Ogogoro”. One of the youths operating such unit and who pleaded anonymity, explained that the aim is to boil barrel of crude oil in a constructed metal seal tank, using wood fire. The crude evaporates through parallel pipes connected through a cooling water bath and the refined products drip out of the pipes at the other end, into different products such as kerosene, PMS and AGO.

It is the opinion of many analysts and professionals that the government should encourage such local contents in the development of modular refinery by retrofitting the commendable techniques and skills already developed in artisanal refining by the locals with the modern technologies that come with modular refinery rather than ordering the JTF to destroy them. That’s the way any sensible government should go under the present circumstance. How well this policy and its implementation will achieve the much desired peace in the region remains to be seen.


Posted by Leye Akinmodiro