Modular refineries in Nigeria are seeking a consistent supply of crude oil from the United States to address a supply gap, according to BusinessDay findings.

This comes amid warnings from industry experts that a significant number of planned modular refinery projects could be stalled due to the unreliable domestic crude supply.

Investors are hesitant to commit funds without a guarantee of feedstock to keep the refineries operational.

Sources said modular refinery operators are now exploring the possibility of importing crude oil directly from the US, citing its abundance and potentially more favorable pricing structures.

“We’ve initiated discussions for the supply of US crude as a potential alternative source of crude,” a senior source in the modular refinery business told BusinessDay on Thursday.

“So long as international grades remain competitive to domestic supply, the refinery will continue to optimize accordingly,” he added.

Nigeria’s newly constructed Dangote refinery announced last month that it was seeking to purchase millions of barrels of US crude oil over the next year as it ramps up processing rates.

The 650,000 barrels per day refinery is taking advantage of cheaper oil imports from the United States for as much as a third of its feedstock as it starts production.

“For modular refineries, the move is to secure a longer-term offtake agreement and a commitment to more permanently diversify its crude sources, coinciding with a period of extreme demand weakness for Nigerian supply.”

Modular refineries are smaller, prefabricated facilities designed for quicker deployment and lower costs compared to traditional refineries.

While Nigeria has a significant number of licensed modular refineries, their operation has been hampered by a lack of guaranteed crude oil supplies.

In 2018, when the defunct Department of Petroleum Resources announced that it had issued 25 licenses for modular refineries; only four had been completed including OPAC Refinery, Duport Edo Refinery, Walter Smith Refinery, and Niger Delta Refinery.

On Monday, BusinessDay reported that funding for the construction of 20 modular refineries in Nigeria is at risk. Foreign investors are withholding their money due to the lack of guaranteed crude oil supply for the facilities.

Sources at the villa said the ministers and top government officials are worried about the development and have summoned an emergency meeting with some operators of the modular refinery.


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