May 25, 2024

Experts ask Tinubu to focus on domestic utilization of crude oil, boost earnings via sales of refined products to other African countries

 

Oredola Adeola

 

Experts have urged President Bola Tinubu to leverage on the marginal increase in Nigeria’s crude oil output expected in subsequent months after the country’s crude oil production output for May 2023 grew by 14.4% to 1.4 million barrels per day, to increase domestic utilization by local refineries, address domestic consumption of petroleum products, and raise dollar earnings through sales of refined products to neighbouring African countries who look to Nigeria for their petrol product supplies.

 

 

They made this suggestion on the sideline of the production recovery and marginal increase in Nigeria’s crude oil output in May 2023 which grew by 14.65% to 1.427,616 million barrels per day (1,183,691-Crude Oil, 65,887-Blended Condensate, and 178,038-Unblended Condensate), from significant dip recorded in April estimated at 1,245,028bpd(998,602- Crude oil, 66,317-blended condensate, 180,110- unblended condensate)

 

 

EnergyDay’s check showed that the 182,588-bpd increase in the country’s crude oil production level for May is the first marginal increase recorded in the first month of President Tinubu’s administration, that has vowed to increase Nigeria’s crude oil production output level to 4 million barrels per day (BPD) by 2030.

 

 

President Tinubu had pledged to nearly triple the country’s oil production target to 2.6 million barrels per day (bpd) by 2027 and to 4 million bpd by 2030.

 

 

While the expected growth in crude oil production output means that Nigeria can potentially earn more revenue from oil exports, experts have hinted that domestic utilization of the crude oil remains the best decision for the Tinubu’s administration since significant amount of the country’s crude oil have remained stranded as foreign buyers turn to cheaper alternatives.

 

 

They have therefore identified the rechanneling of the crude oil output level as feedstock for local refineries as one of Nigeria’s single largest investments that will address the country’s repeated fuel shortages, reduce the country’s dependence on imported petroleum products, and ease the burden of petrol subsidy removal.

 

 

Experts have suggested that Nigeria’s administration should focus on domestic utilization of crude oil, as a significant amount of the country’s crude oil remains stranded due to foreign buyers turning to cheaper alternatives.

 

They noted that rechanneling the crude oil output level as feedstock for local refineries is one of Nigeria’s single largest investments that will address the country’s repeated fuel shortages, reduce the country’s dependence on imported petroleum products, and ease the burden of petrol subsidy removal.

 

 

Dr. Lai Fatona, a retired pioneer Managing Director of Niger Delta Exploration & Production Plc, believes that the new administration can address one of the fundamental economic crises facing the country through substantial increase in domestic crude oil and gas production and local refinery utilization, outside of OPEC’s 1.8 million daily production quota allowable for Nigeria in 2023.

 

 

According to him, increase in crude oil production, domestic refining and consumption are necessary requirements to that would enable Nigeria to achieve its energy independence and security aspirations.
Dr. Fatona said, the crude oil production and domestic utilization will be deployed for internal sustainable industrial and quality of life growth.
“Added to this scenario, our satelite West African energy deficient neighbours had traditionally depended on energy resources from Nigeria.  The country already, therefore, have a huge captive market to be serviced and developed by such portfolio of increased domestic production, refining and consumption.
The retired geologist therefore noted that the expected crude oil increase under the Tinubu’s administration is possible outside of any OPEC purview.
He said, “In essence, the gap between our national aspirations in the policy document, over and above any recent OPEC specified production allowable, already have a space to be deployed.
He also emphasised that internal consumption would enable sustainable growth and development.
He said, “With our rising young population – our priority will be the need to meet our affordable energy goals. All Nigerians deserve to have affordable energy, where and when it is needed. Which in effect is all over the entire country.

Professor Adeola Adenikiju, Professor of Economics, University of Ibadan, believes that domestic refining of crude oil is fundamental to easing the impact of subsidy removal and boosting the country’s industrial capacity.

 

 

On his part said that the new administration ambition to grow the country’s crude oil output will not negate OPEC’s allowable output limit.
He noted that domestic refining of the is fundamental to easing the impact of the subsidy removal and boost the country’s industrial capacity.
He said, “If we produce more and use the marginal increase above OPEC’s quota locally, we will have what it takes to grow the country’s economy and develop the human capacity.”
He added that the need to redirect country’s production output to boost domestic utilisation is long overdue, adding that the successive administrations have in the past made attempt to increase domestic production by deregulating the downstream petroleum industry to tackle shortfalls, end inefficiency and enhance quantities of petroleum products in Nigeria.
Professor Adenikiju therefore revealed that the production’s increase is possible if President Tinubu is committed to expanding the frontiers of the domestic market and recharge the economy.

 

 

 

 

 

 

 

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Dr. Lai Fatona, retired pioneer Managing Director of Niger Delta Exploration & Production Plc, in a conversation with EnergyDay at the weekend said that the new administration can address one of the fundamental economic crises facing the country through substantial increase in domestic crude oil and gas production, and local refinery utilisation, outside of Organisation of Petroleum Exporting Countries(OPEC)   1.8 million daily production quota allowable for Nigeria in 2023.

Dr. Fatona therefore noted that rechanneling the country’s oil and gas into domestic market is a compulsory performance expectation for the new administration, if it is really committed to achieving energy security and independence.
Professor Adeola Adenikiju,  Professor of Economics, University of Ibadan,