Modular refineries: A sound strategy
By Godwin Igwe
That the Federal Government has the motivation and desire to legalise the “ILLEGAL refineries” is commendable. It is sound strategy even though long overdue. First, let’s humanise the activities and call them “artisanal or cottage industries.” Remember, a country, unable to refine its own crude oil lacks internal, external, social and economic security.
Now, desperate people do desperate things. Imagine a country where majority of the people live below the poverty line of $1 a day, where there is no clean drinking water, no good roads, and there is unemployment everywhere. This is also a country where a growing child, when asked about education would rather prefer to be a politician so that he could become instantly rich when he grows up.
One can be persuaded to believe that life in the Niger Delta states (Bayelsa, Rivers, Delta, Imo, Akwa Ibom, Edo and Abia), is unpleasant as described by Thomas Hobbes in his book Leviathan where “the life of man is solitary, poor, nasty, brutish and short, with continual fear and danger of violent death”. Hobbes believed that we are all basically selfish, driven by fear of death and the hope of personal gain. All of us seek power over others, whether we realise this or not.
The consequence of this, he argued, was that if society broke down and you had to live in what he called ‘a state of nature’, without laws or anyone with the power to back them up, you like everyone else, would steal and murder when necessary. At least, you would have to do that if you wanted to carry on living. In a world of scarce resources, particularly if you were struggling to find food and water to survive, it could actually be rational to kill other people before they kill you. In Hobbes’ memorable description, “life outside society would be ‘solitary, poor, nasty, brutish, and short’.”
That’s why we have laws. Laws are no good if there isn’t someone or something strong enough to make everyone follow them.
With a thoughtful implementation and management of the modular refineries programme, the government can reduce unemployment, poverty, and hunger in the Niger Delta states. The programme should be envisioned, enabled and well articulated in terms of infrastructure development investments, budgeting, crude oil supplies, power supplies, and technical entrepreneurial professionals, to avoid people following so many rabbits from a blanket general statement of consortia formation supporting establishment of modular refineries.
Modular refineries will teach us: Wisdom of supply and demand; need for effective champion, gatekeeper, driver; economic and security implications. Infrastructural Investments: Put your money where your mouth is (EU spends about 59 Billion Euros per year on farm subsidies on the “Common Agricultural Policy” (CAP); hundreds of designs. URL below shows all kinds of modular configurations in the world.
Nigeria currently imports over 60 million liters of petrol every day. Cost of importing fuel in 30 days is enough to build 5-10 modular refineries. Current crude oil price free fall can be turned into gold for Nigeria by building modular refineries in most states in Nigeria.
Added benefits and values include: Production of a combined volume of over 1,000,0000 litres per day of petrol, diesel, aviation kero, kerosene, naphtha, and other petrochemical products; creating over one million jobs for Nigerian youths; creating over 1000 spin-off medium and small businesses, such as shipping, engineering, construction, logistics, fabrication, and many more.
training over 120,000 Nigerians and community indigenes; provide food and shelter for over five million Nigerians; rejuvenating our national economy with another “oil boom era” and chance to export excess fuel produced by the refineries and earn forex from fuel export; and regenerating various key socio-economic sectors and sustainably raise the Nigerian GDP.
Oil communities can be transformed into the oil capital of Nigeria and Africa by forming oil community cooperatives and making them key stakeholders in the ownership and operation of these modular refineries.
Also, communities and indigenes will have an alternative sustainable source of income. It will foster a fresh sense of ownership, deep sense of commitment and responsibility for protecting all the Nigerian oil assets in their environment, hence eradicating the ugly era of “pipeline vandalisation and oil spills” and saving the Nigerian government the current daily loss of huge sums of money.
As more countries are discovering oil, our exports will begin to drop at some stage. In addition, with climate change, development of alternative fuels, that is bad news for crude oil producers. Our case is even worsening because of frequent production outages and unprecedented oil theft, despite the billion-naira contracts awarded to militants to safe guard the pipelines. We are taking loans every day and our debts are piling up. The world’s biggest consumer of crude, the U.S., has now found a formidable alternative in shale oil. So, the demand for our oil has fallen and will only continue to fall.
The new reality is that crude oil is no longer a monopoly. As demand falls, the price will fall. As the price falls, production will fall
Many oil fields will become unprofitable to operate. They are likely to close down. In this event, the naira would crash. A fall in foreign exchange inflow will hurt us since we are import-dependent. If we deplete our external reserves to protect the naira, it would impact negatively on the general prices of goods and services, hence, less money to build infrastructure, less money for government overheads, leading to retrenchment and salary cuts. Money to fund fuel subsidy and petrol price will increase and as petrol price goes up, mass unrest will ensue as cost of living rises”.
The issue here in Nigeria is clear: a) Prioritise and test the idea of modular refineries; b) set up a Refining and Petrochemicals Authority to have a focal point, and c) let illegal refineries become “legal artisanary refineries” by training them. It is sound reasoning. It is practicable. It is demonstratively a true paradigm shift for the good.
Igwe is a Professor of Chemical Engineering at the University of Port Harcourt