$4 Billions Investment Plan for Refinery in Nigeria

October 29, 2008 by D-8 Secretariat

Two major Indian companies - ONGC and L N Mittal group plan to build a $4 billion refinery in the country. A joint venture between the two companies, is said to appointed UK-based consultant Nexant to undertake a feasibility study for the proposed 9-million-tonne refinery.

“The consultant is expected to submit its final report by the end of this year,” a source close to the development said.The Indian company, OMEL and Nigerian National Petroleum Corp (NNPC) have constituted a steering committee to work out details of the project.

The steering committee is supervising the implementation of the project.

It is learnt that officials from NNPC are scheduled to visit India later this month.

The team would also visit Mangalore refinery of ONGC’s subsidiary, Mangalore Refinery & Petrochemicals (MRPL) to have an idea, the source said.

The refinery project is said to result from a memorandum of Understanding,(MoU) signed between OMEL and the Nigerian government in November 2005 which obligated the Indian partners to make some infrastructure investments in the country in exchange for the concessionary allocation of oil exploration blocks to them.

OMEL preferred to construct a refinery over other two options - a 2,000-mw power plant or a railway project.

The company had bagged three blocks in Nigeria - OPL-285, OPL-279 and OPL-297 - in 2006.

The first two were as per the MoU under which OMEL had committed to undertake an infrastructure project. Sources close to development say that the geological works in the first two blocks are in progress and the first well is expected to be drilled in OPL-285 by June-July 2009.

The blocks are believed to be highly prospective, which may have prompted oil major Total to pickup equity stakes in OPL-279 and OPL-285. The third block - OPL-297 (earlier known as 246) is currently under dispute in the Nigerian court. OMEL is said to have pledged to spend around $6 billion in Nigeria based on the 2005MoU. OMEL, however, linked this level of investment with an estimated hydrocarbon production of about 650,000 barrel oil equivalent (boe) daily for about 25 years. Local refining of Nigerian crude oil,which is mainly exported, remains a key issue in efforts to maintain adequate supply of refined petroleum products at reasonable prices.

D-8 Organization held the Fourth D-8 Working Group Meeting on Energy in Cairo, Egypt on 1-2 June 2008. In the meeting, D-8 Secretary General Dr. Dipo Alam highlighted that the D-8 Working Group on Energy should focus its work on renewable energy, suggest long term strategies, including sustainability of supply and prepare a RoadMap of cooperation for the next 10 years. He also expected the preparation of a strategic study and the continuous monitoring and analysis of the high oil prices both in short, medium and long-term. He also encouraged all delegates, representing member states to implement all the programmes and projects agreed upon from the previous recommendations including the 4th WG.

D-8 also urges memberstates and their private sectors to develop deeper ties in energy sector.

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