ECOWAS Regional Advisor, African Refiners Association and Managing Consultant/CEO PEJAD Nigeria Limited Engr Tony Ogbuigwe has warned Nigeria an Africa countries of the dire implication of electric cars coming into the global energy market to displace fossil fuel in the next eight year. In a paper presented at the Lagos Chamber of Commerce and Industry second dialogue session he said that while aggregate demand his rising in Africa, refining capacity is falling.
He said with electric cars coming into the market it will displace fuel in Europe and other develop countries, but that Africa will still depend on petrol. He said that the Present aggregate Nigerian demand for petroleum products is approximately 60million litres per day, made up of 42million litres of PMS; 8million litres of HHKero; 1.5million litres of ATKero; 9million litres of Diesel . Ogbuigwe said “International Energy Agency IEA projects that aggregate demand will rise to 2.7mb/d BY 2040.
Electric cars and renewable sources are not foreseen to alter this for Africa. If no new refining capacity is added, and if existing plants don’t ramp up, supply to Africa and consequently growth and industrial activity can be disrupted for a variety of reasons; Unavailability of products from Europe and Asia; disruption in sea transportation; a major refinery in Europe or Asia goes into unplanned shutdown; an unexpectedly severe winter diverts all products to the producing countries; energy security will be threatened by events elsewhere”
According to him “with a 170~180million population, Nigeria would be hardest hit when electric cars come into the market to replace petrol powered cars. He said when it happens queues at filling stations will resurface, there will be disruptions to economic activity, paralysis of movement, insecurity, political instability and civil disturbances
He said that now is the time for Nigeria to invest in modular refineries to increase product refining. According to him “There is no more subsidy on petroleum products; only the price of PMS is still regulated; the PPPRA functions have been scaled down; the government has stated its support for public sector involvement in refining and that even NNPC has set up a commercial structure in which the intention is that refineries are free to sell to any marketer. This is one step away from full commercialisation”.
He said that access to finance had been a major reason why none of over 40 announced projects in SSA has been realised. We now have serious interests from Chinese investors to invest in new refineries in Nigeria. Nigeria’s huge population and the consequent large demand is the attraction. By 2020, aggregate Nigerian demand will be equivalent to 800,000 bpsd refining capacity.
DPR has removed the stumbling block of a $1million registration fee for those seeking licence to establish refineries. DPR has published “Guidelines for the establishment of Hydrocarbon Processing Plants in Nigeria” 25 private refinery licenses to establish (LTE) have been granted three for full scale refineries; 22 to build modular refineries with capacity totalling 1,429,000 bpsd.
With the removal of subsidy, it is hoped that some of the modular refineries will become a reality. He said that for modular refineries to function there is need for investment in efficient storage and distribution infrastructure for petroleum products; there should be full deregulation of the downstream oil and gas sector; PPPRA or whatever succeeds it should function strictly as a price monitoring and market intelligence agency; the private sector should drive new refinery investments and government should hands off or be simply a minority equity holder on independent joint venture basis. He also said that access to crude oil supplies should be made easier for private investors on commercial terms while ideal for stranded production fields and remote locations can be put together within a relatively shorter time span.
He suggested rapid production of feedstocks for downstream petrochemical plants; removal of the need for costly transportation of crude oil through pipelines which may be susceptible to vandalisation and the fuel oil be used for power generation in contiguous industries.
