Minister of State for Petroleum Dr. Emmanuel Ibe Kachukwu has raised Nigerians’ hope about the dwindling oil revenue, with the news that the United States will now buy some crude from Nigeria.
“Post the President’s visit, there has been an overture from them to say they want to buy limited quantity of Nigerian oil to support the market. We are still ongoing on that,” he said.
Kachikwu allayed fears over the return of the U.S. to oil export, stressing that the country’s sale of oil does not foreclose its tendency to buy crude at the same time.
According to him, the volume of oil that the US intends to do is little and it is for her internal consumption.
Kachikwu, who spoke with reporters at the Kaduna airport after his inspection of the Kaduna Refinery and Petrochemical Company (KRPC) in Kaduna State, said the U.S. is still importing oil to build up her reserves.
He said: “The fact of U.S. being back into the sales market obviously what you find is that the volume of export U.S. intends to do is very minimal for a lot of internal consumption.
“And strategically they are still reaching out to buy certain barrels and, in fact, they are hoping to buy a couple of Nigerian barrels. So the strategic reserve is key for them to make a very strong strategic reserve. They have also produced more than they have never done in their history now .
“From the financial point of view they sometimes sell and still buy, and they do that with gold, they do that with cotton, they do it with a lot of commodities. The whole idea is that if oil prices are cheaper, they buy, and use that to fill their reserves.”
According to Kachikwu, the United States has never completely exited the importation of Nigeria’s crude since three major oil companies – Cheveron, Exxonmobil and one other – still take their 40% share to their refineries.
What the United States stopped was her importation of the Nigerian National Petroleum Corporation (NNPC) share of the crude, the minister said.
Kachikwu, who is also the Group Managing Director (GMD) of the NNPC said the two countries were discussing the purchase of the corporation’s share of Nigeria’s crude.
He said: “Three of the oil companies are U.S. At least I can say Exxonmobil , I can say Cheveron, but you realise that 40% of their production goes into the U.S., so when you hear zero importation of Nigerian oil it is not really stopped . It is not true because they take their shares to their refineries.
“What we are talking about is the NNPC portion of the crude which is 60% and that is the element we are talking about – whether or not they will continue to buy.”
Analysing the nature of the Nigeria/US oil market relations, the minister said: “ You also know that they are diversifying to the Shale in terms of the sale of products. Now you take 900,000 from a million barrels, out of that 455 is local intervention. So what you are talking of is about 450, 000 barrels. It is not enough in terms of the NNPC portion.”
Asked what the Ministry of Petroleum Resources was doing to ensure that the Department of Petroleum Resources (DPR) is better equipped to monitor oil production in view of the impression that the DPR has no knowledge of the volume of oil that the International Oil Companies (IOCs) produce at the well head, the minister said it was false.
He insisted that the DPR could ascertain the level of production, stressing that it was the inspection that brought about the volume of production that the Federal Government used for its budget.
Kachikwu said: “That is not true. I think the DPR knows the quantity of oil we produce. We do know the volume of oil we produce and that is the number we use for budgeting. I can tell you, for example, we are doing 1.89million barrels per day. I can tell you we are targeting 2.2million barrels per day next year. There are measurement indexes for that.”
The minister said it takes an average of three to five years to build a new refinery at $2billion to $2.5billion which is too huge for government to afford.
“It takes investment of $2billion and $2.5billion and those are not monies that we can afford,” he said, adding: “What we are encouraging people to do is to unbundle refineries that are all over the world, which are for economic reasons being de-assembled and bring them here and set them up and run them”.
This, said Kachikwu, would prune the cost of refineries for investors, especially when they are sharing the same premises, the same power source, because power is a key element of that cost.
He maintained that adoption of this method of construction of a fairly used refinery could be take about 18 months to build and reduce the cost to below one billion dollar and bring about quicker return on investment.