Kaduna Refinery: FG Explores Alternative Crude Oil Supply Route

Yemisi Izuora

The federal government is giving serious consideration to bringing the Kaduna refinery back to full production.

This it entails to achieve by creating alternative crude supply route to feed the facility.

Government has said it will start bringing in crude oil from Republic of Niger to boost operations of theKaduna Refinery and Petrochemical Company, KRPC.

Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Dr. Maikanti Baru, confirmed that government is ready to construct about 1, 000 kilometer crude oil pipelines from Niger Republic to Kaduna Refinery.

According to him, “Due to challenges with the aged refinery and crude oil pipelines that had been breached severally, the operations of the refinery has been epileptic.

This we are determined to resolve through various intervention methods, including evaluation of alternative crude oil supply from Niger Republic through building of a pipelines of over 1, 000 kilometers from Agadem to Kaduna”.

He said: “It was important to explore alternative crude supply to KRPC, which has been affected by vandalism of pipelines and  obsolescence, assuring that the initiative will reduce downtime of the plant and ensure optimal utilisation.

“The Corporation has already started engagements with the Nigerien Minister of Petroleum and the Chinese that are operating the field at Agadem (The Agadem Block is located in the East Niger Rift Basin)

Baru, pledged to drive the energy supply project to power industries in Kaduna by ensuring the completion of the Ajaokuta-Abuja-Kaduna-Kano (AKK) gas pipeline.

On his part, Managing Director of KRPC, Malam Idi Mukhtar, said the Fluid Cracking Catalytic Unit (FCCU) of the plant was restreamed in  June.

“The Kerosene Hydrotreating Unit (KHU) rehabilitation is ongoing with the equipment overhaul and integrity checks. When operational the margin of value addition on kerosene and Aviation Turbine Kerosene (ATK) will provide millions of naira in revenue, even at a throughput of 60 per cent,” Mukhtar assured.

It would be recalled that the refinery was designed to process both imported paraffinic and Nigerian crude oils into fuels and lubes products and was constructed by Chiyoda Chemical Engineering and Construction Company (now Chiyoda Corporation) of Japan. In December 1986, the design capacity of the fuels plants of the Refinery was successfully  debottlenecked from 50,000 barrels per stream day (BPSD) to 60,000 BPSD, bringing the total refinery installed capacity to 110,000 BPSD.

Oriental News recently reported that Savannah Petroleum has already signed a Memorandum of Understanding, MoU with the Nigerian National Petroleum Corporation, NNPC,  and the New Nigeria Development Company Ltd, NNDC, for completion of the Nigerian section of the Central Agadem Rift System, ARB.

Over the course of recent months, discussions between relevant governmental and corporate stakeholders have progressed materially in relation to the export of ARB crude to the Kaduna refinery in northern Nigeria.

Discussions envisage the initiation of an Agadem-Kaduna early export system using trucks prior to the construction of a c.800km pipeline solution.

CGG has reviewed the development plans and associated economic modelling in relation to the Agadem-Kaduna export options.

The principal conclusions of this work are based on current assumptions that the breakeven oil price will help to generate a 10 percent return on invested capital for crude piped to the Kaduna refinery estimated at US$26/bbl with a Net Present Value at a long-term oil price of US$60/bbl (inflated at 2% p.a.) per barrel of US$5.1/bbl;

Also, it is envisaged that the breakeven oil price will generate a 10 percent return on invested capital) for crude trucked to the Kaduna refinery is estimated at US$35/bbl with an Net Present Value at a long-term oil price of US$60/bbl (inflated at 2% p.a.) per barrel of US$3.7/bbl.

It should be noted that the Agadem-Kaduna export route is seen as being in addition to the already significantly progressed third party planned extension to the Chad-Cameroon pipeline, thus creating optionality in relation to potential Agadem crude offtake.

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