Construction of Katsina refinery yet to begin 1 year after agreement
The proposed construction of a new refinery in Katsina state has failed to take off one year after the agreement for the project was reached between Nigeria and Republic of Niger, Daily Trust reports.
Officials familiar with the project said it has not kicked off because the Nigerian government was yet to secure the commitment of China’s state oil firm the China National Petroleum Corporation (CNPC) to supply its crude share in the Agadem oil field to the proposed refinery in Katsina, Nigeria.
In February last year, the Nigeria’s ministry of petroleum resources announced that a mutually beneficial agreement was reached for the construction of a refinery in Mashi, the border town between the Republic of Niger and Katsina State, Nigeria, and a crude oil pipeline from the Republic of Niger to the new refinery.
Later in July, the then minister and his Nigerien counterpart, Foumakaye Gado, signed a Memorandum of Understanding (MoU) in Abuja on the construction of the refinery in the presence of both countries’ presidents.
Two committees – a Steering and a Joint Technical Team – were set up to determine the feasibility of the projects and were expected by December 2018 to come up with a detailed road map and guideline leading to the actual execution of the projects.
But Daily Trust gathered that the Katsina refinery and pipeline project would not start except the Nigerian government is able to convince CNPC to commit its crude share in the Agadem oil block in Niger for the proposed refinery.
CNPC holds the operating permit and 80 per cent of the proven crude oil reserve in the Agadem block located in the semi-arid eastern region of Diffa, bordering Chad with estimated one billion barrels oil reserves. CNPC is already pumping oil in the Agadem block for primarily Niger’s domestic use.
Niger, which owns 20 per cent of the crude, is keen to ramp up its production and had opened talks with its southern neighbour Benin on the possibility to export its oil via a pipeline that will link its oil fields to the port of Cotonou in Benin.
Though safer than the Chado-Cameroonian pipeline route, which already exists, experts said this alternative is much more costly, as Niger would have to double its investment in the project and build a pipeline in its territory, and another one in Benin.
Speaking on some of the challenges holding back the Katsina refinery project, Nigeria’s Engr. Rabiu Suleiman, who heads the Joint Technical Team that is developing a road map and strategy for the refinery and pipeline projects, noted the Nigerien government, as of today, has committed its 20 per cent oil share at the Agadem oil block to Nigeria.
“The owners of the 80 per cent, the Chinese were looking at Nigeria in the first instance, the Benin Republic and Cameroon through Chad.
“We are discussing on how the Chinese can withdraw from the understanding they have with the Benin Republic without any litigation and come back to Nigeria and dedicate crude for Nigeria,” Suleiman said.
“The minister of Niger confirmed to us he is pushing hard for the Chinese to agree to the Nigerian project rather than Benin,” he added.
“To run a pipeline from Agadem to the Benin Republic seaport is like 2080km which will be very costly compared to Agadem-Katsina which is just 120 to 150km.
“The cost of the 1km pipeline of the size we are talking about is about $1.5m. If you do a 2000km plus pipeline it means you have to invest over $3bn on the pipeline alone,” he said.