The Edo Refinery and Petrochemicals Company Limited (ERPCL), a modular refinery with a 1,000-barrel-per-day capacity in Edo State, is confronting severe operational difficulties due to ongoing crude oil shortages.
Located in Ologbo, Ikpoba-Okha Local Government Area, and operated by AIPCC Energy Limited, the refinery was established to decrease Nigeria’s reliance on imported petroleum products and enhance local refining capabilities.
Despite being fully operational for nearly three years, ERPCL has been unable to secure sufficient crude oil to run at full capacity.
Segun Okeni, Head of Technical Operations at the refinery, voiced significant frustration during a recent press conference in Benin City.
Okeni disclosed that although ERPCL has had crude oil supply agreements with major oil companies such as Seplat and ND Western since 2022, bureaucratic obstacles have hindered access to the crucial resource.
“Our refinery has the capacity to process 1,000 barrels of crude oil per day, yet we are unable to operate at full capacity due to the lack of crude oil,” Okeni lamented.
He explained that the refinery’s management has made multiple attempts to secure crude oil, including meetings with the Nigerian National Petroleum Company Limited (NNPCL) and other relevant bodies, but these efforts have not resulted in tangible progress.
The refinery’s struggle with crude oil supply has been ongoing since August 2021, when its team met with NNPCL’s Group Chief Executive Officer, Mele Kyari, and other top officials to discuss the refinery’s need for crude oil.
Despite a formal request for crude supply, the request has been bogged down by bureaucratic delays.
In July 2022, NNPCL and the Nigerian Petroleum Development Company (NPDC) conducted a site inspection at the Edo refinery to verify its readiness.
Following the inspection, ERPCL was invited to commercial negotiations with NNPCL, but these discussions have yet to yield a concrete agreement.
Further efforts to address the crude supply issue included reaching out to the Ministry of Petroleum Resources in March 2022 and holding meetings with NNPC Exploration and Production Limited (NEPL) between November 2022 and March 2023.
Despite these actions, the refinery still awaits necessary approvals and allocations for crude oil offtake.
Okeni described the past two years as “frustrating,” expressing concern that the ongoing supply challenges could deter both local and foreign investors from engaging in Nigeria’s refining sector.
“If we local investors can’t get crude, even as small as we are, how can we expect foreign investors to be encouraged to invest in the country?” he questioned.
He also highlighted the potential economic advantages of supplying crude oil to modular refineries like ERPCL, arguing that local refineries could reduce pipeline losses and transportation costs, making them more competitive compared to offshore refineries.
Okeni pointed out that the total daily crude oil demand of all modular refineries in Nigeria is less than two percent of the country’s daily production, yet these small refineries are being neglected.
In addition to crude supply issues, ERPCL faces challenges in securing infrastructure for crude oil loading and transportation.
Despite an agreement with ND Western to lift crude oil from the Ughelli Pumping Station, no progress has been made in modifying the facility for this purpose.
The disparity between support for large refineries, such as the Dangote Refinery—which is set to receive 30,000 barrels of crude oil per day—and smaller refineries like ERPCL, further compounds the issue.
Okeni expressed disappointment that despite numerous communications with NNPCL and other authorities, no action has been taken to address the refinery’s supply challenges.
As ERPCL continues to operate at less than 10% of its installed capacity, Okeni has called for immediate intervention from NNPCL’s Group CEO, Mele Kyari, to resolve the issue.
He urged Kyari to approve the Seplat-ERPCL agreement, which would allow the refinery to commence crude oil lifting from designated oil fields.
The ongoing difficulties at the Edo refinery highlight broader concerns about the future of Nigeria’s modular refineries, which were intended to boost local refining capacity and reduce dependence on imports.
The refinery’s struggle to secure crude oil underscores the challenge of fulfilling the promise of increased local refining capacity and economic growth.
