Nigeria plans new refineries with Venezuela and Iran

Feb 07, 2007 01:00 AM

Minister of Petroleum Resources, Edmund Daukoru says Nigeria is negotiating with several oil companies including state-run firms from Venezuela and Iran, on the establishment of two refineries that will cost about $ 6 bn.
"Iran and Venezuela are involved in these discussions. There are also majors (international oil companies) Total, Shell, and Chevron," he said.

The capacity of each refinery may be around 200,000 barrels.
"We are at early stage... We also have to get around the domestic situation. We have price caps here in Nigeria on diesel and gasoline and, obviously, that's a concern to investors," the Minister further said that India, which has already been looking at other energy investments in Nigeria, is also looking at the possibility of taking stakes in the refineries.

US oil major Chevron, Anglo-Dutch Royal Dutch Shell and France's Total are also considering investment stakes in the projects, Daukoru said. The negotiations also entail discussions with some of the companies about building production facilities to convert cassava, a root vegetable that is a staple food in Nigeria, into ethanol.
Nigeria has long had insufficient crude refining capacity to meet domestic demand, forcing it to spend hundreds of millions of dollars a year on importing refined oil products. But Daukoru stated that "We're hoping to have a decision by the end of the year (on who will build the refineries and when)... but it depends on how we resolve the domestic situation (with price caps)," he said.

According to him, the country's four state-run refineries have for years operated at reduced capacity, due poor management and maintenance and sabotage. He said the country has tried to boost its refining capacity by requiring companies bidding in some of the country's recent oil exploration rounds to also invest in refineries.
Daukoru said he expected to announce in coming weeks a formal date for the country's next bidding round on oil exploration blocks. The round will involve at least 20 onshore and offshore blocks, Daukoru said. In January, he said.

Nigeria planned a bidding round involving up to 60 oil blocks and also said talks were underway with India's state-run NTPC Ltd. on a deal involving a new power plant and Nigerian supplies of liquefied natural gas to India. Nigeria's oil production in January averaged 2.1 mm bpd, down from December, Daukoru said.
Nigeria produced about 2.25 mm bpd in December, according to OPEC's monthly oil market report released in January.

Source / Daily Trust
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