By Yakubu Lawal,
Asst. Energy Editor

The Minister of State for Petroleum Resources, Dr. Edmund Daukoru, said at the weekend that the shift in deadline is inevitable.

None of the oil companies has made any appreciable move towards meeting the target that was declared last year by President Olusegun Obasanjo at the opening of an international conference by the Society of Petroleum Engineers (SPE) in Abuja.

Also, of the 18 companies that have secured government's licence to build and operate refineries in Nigeria, only the Chief Emeka Anyaoku-led Orient Petroleum Resources Limited has made efforts to actualise the dream.

Daukoru, in an interview with reporters in Lagos at the weekend, said that the deadline is not realistic. According to him, the government has not translated the national aspiration into a concrete deadline.

"We have not really concretised plans to give effect to the aspiration to refine 50 per cent of our domestic production. The time is not on the positive side," he said.

According to him, the government and those pushing the deadline have to be realistic about it, stressing that it would take between two and three years for such plant to come on stream.

His words: "We really have to be realistic about this matter. Even if we have to start building a refinery today and it is going to be a world class refinery, it is going to take between two and three years."

The minister explained that as a new comer in the construction of a refinery, the companies would be required to get necessary permits and conduct the Environmental Impact Assessment, noting that some of such assessments take up to 18 months.

"We really need to review the date," the minister declared.

Daukoru noted that the directive was issued last year and that even if construction had begun immediately, it would still take at least three years for a refinery of world standard to actually come up.

"If you talk about the majors, they are not looking at small kid-mouthed things. They go for economies of scale. They like to produce product specifications that would be acceptable to consumers globally. That kind of project can only take three years minimum to become operational," he said.

The minister added that while he recognised the need to increase the domestic fuel supply through the setting up of more refineries in the country, emphasis at this point must be on encouraging more middle level and small companies to set up refineries in the country.

"Our local refineries will go a long way if we try to improve our local refining capacity. Even at their best, they can only refine 445,000 barrels per day. Our national production is 2.5 million barrels in round figures. Only 445,000 barrels can not make the 50 per cent of 2.5 million we are talking about, even if government invests to improve the local refineries," Daukoru stated.

The Minister said that Nigeria needs to invest in additional plants to be able to achieve the aspiration.

According to him, the country must have a policy to encourage investors outside the circle of the multi-nationals or majors, pointing out that the role of the majors in the world oil economy is shrinking as they are often driven by profit.

"So, we must maintain a tight policy of pushing the majors, while also encouraging other independent and local entrepreneurs to form alliances that can also step into their shoes," he stated.

President Obasanjo had in August last year given the multi-national oil companies operating in the country up till the end of 2006 to start refining 50 per cent of their production locally in the country.

Obasanjo, who gave the directive at the opening of the SPE Conference, had said it was high time the oil companies began to add value to the downstream sector through refining.

Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Funso Kupolokun, in an exclusive interview with The Guardian early this year, reiterated the President's position on the target.

Kupolokun said that the directive would also force the NNPC, which controls 57 per cent equity in the joint venture arrangements, to look for ways to deal with its crude oil.

Some oil operators, under the aegis of Oil Producers Trade Section (OPTS) of the Lagos Chambers of Commerce and Industry, had, however, warned that the policy might not achieve the desired goal as foreign companies operating in Nigeria do not maintain both upstream and downstream refining operations in the country.