Why FG cannot support Niger Delta’s many artisanal crude refiners – Minister

Timipre Sylva: Minister of State of Petroleum

By Edith Ike-Eboh

The Minister of State for Petroleum Resources, Chief Timipre Sylva, says that government will support artisanal refiners that are lawful in their operations.

The Minister disclosed this in Abuja on Sunday when he featured at a Forum of the News Agency of Nigeria (NAN).

He said that government had been supporting building of modular refineries to help boost local production and equally reduce the impact of oil exploration on the environment.

He said that the illegal operations of artisanal refiners had made it impossible for government to support such ventures.

“You see, when they talk about artisanal refineries, well, I have my position on it. I like the fact that people are trying to make a living in a way; but earning a living must be lawful.

“When you compare artisanal crude oil refiners verses artisanal refiners of gold, people must understand the clear difference, I don’t have any problem with you being an artisanal producer of crude.

“The people who are artisanal producers of gold, go and dig, any small quantity they get, they sell. So, if you too want to go and dig your own crude oil, it is okay. Use your shovel, anything you like, dig your own crude oil and sell.

“Artisanal can be selling their own crude oil in bottles or selling in buckets as long as you produce the crude oil.

“That is artisanal crude oil producers that I will recognise.

“But if you are artisanal refiners and you are stealing what somebody else has dug up from the ground and you are stealing to refine, then, you are not being fair,’’ the minister said.

According to him, If the artisanal gold producer steals the gold because gold is produced in his area, then you are a criminal.

The Minister said that one essential difference between the two products is that in the case of gold, they go and dig it up and produce it by themselves, so, they can sell it and make money.

“Crude oil , the problem we have is that crude oil, the people do not produce it, they go and steal what other people have produced. So, they cannot be considered as an artisanal producer,’’ he added

He said that government had awarded the marginal field license programmes that involved Nigerians and urged the artisanal refiners to go and join the programme

“He further urged artisanal refiners to join people that have modular refineries to operate.

“There are so many ways people can participate, but not to go and steal what somebody else have invested money to produce and then you say you are an artisanal refiner,’’ he noted.

Sylva said that the business of oil had a lot to do with economy of scale in production.

“For instance, if you are printing, if you are printing more, you have cost cut down but if you print less, your unit cost goes up, so it is in the oil industry.

“If you produce little, the cost of production is higher than if you produce more. If you refine more, your cost of production will become lower than when you refine less.

“So, the fact is that if you have these small refiners , their cost will not be easily controlled and second, it is going to be a major regulatory nightmare,’’ he added.

He said that currently the environment had been adversely affected with the few operators in the Niger Delta, adding that allowing more refiners that produces little quantity would cause more damage.

“Now let’s say we have a thousand modular refineries or let just say 100 refineries doing 1000 barrel per day.

“These are good size modular refineries. The artisanal, we are not even talking about up to 1,000 barrels. It would even be more, but I am just using that standard of 1,000 barrel.

“ If you have about 1,000 barrels refiners, about 100 of them in the Niger Delta those kinds of refineries cannot be far from the source of the raw materials because it is better for them to have easy access to raw materials.

“If you have 100 refineries, you can imagine what it will be. Everywhere, it will be one refinery going up.

“And now, you have 100 refineries and it will give you 100,000 barrels of refined products by 100 refineries verses one refinery that will give you 100,000 barrels also, from one refinery. Which refinery will be operating better?

“The 100,000 barrels, So, frankly speaking, yes, it is good for us to have modular refineries, I agree, and I am promoting it.

“But when you take it below modular refineries, and say artisanal refineries, we are now going to be having about 500, 200, 100 refineries,’’ he said.

This, he said would be harmful to the environment.

He noted that government has a modular refineries programme giving loans to support people to build modular refineries.

“We understand the need for modular refinery, at least to complement the bigger refineries, but you know, when you proliferate at the level of 500, 200, 100 barrels per day, then you don’t wish us well in the Niger Delta,’’ he said