Nigeria's Capital Oil & Gas plans Lagos refinery

Nigeria's Capital Oil & Gas Industries Ltd. plans to build a refinery in Lagos with the state government, OGJ has learned.

Uchenna Izundu
OGJ International Editor

LONDON, Feb. 19 -- Nigeria's Capital Oil & Gas Industries Ltd. plans to build a refinery in Lagos with the state government, OGJ has learned.

The partners want to form a joint venture and are carrying out an environmental impact assessment for the 100,000-200,000 b/d refinery. They hope to lay the foundation stone by yearend. Construction is expected to take 4 years.

Capital Oil, a private company, focuses on Nigerian downstream activities and the importation, local sourcing, storage, marketing, and distribution of petroleum products.

If the refinery is built, it would be a major initiative for Nigeria as the nation has a total installed state-owned refinery capacity of 445,000 b/d. However, the refineries have not run at full utilization due to sabotage, infrequent power supplies, fire, poor management, and maintenance turnarounds. Consequently, Nigeria imports most of its fuel products.

Nigeria National Petroleum Corp. (NNPC) is carrying out a turnaround and maintenance program to restart the 100,000 b/sd Kaduna refinery in March, a delay of 2 months on its revised deadline due to congestion at the port in Lagos and to clearance of materials for imported equipment. Kaduna's program was expected to be finished last August.

The Warri refinery was restarted in February 2008 after being idle for 2 years following militant's sabotage.

NNPC's subsidiaries operating the refineries have struggled to maintain them as they have limited funds to do so. In addition, authorization for work that exceeds this threshold requires separate negotiations with NNPC.

Edo State Governor Adams Oshiomhole has suggested that the refineries be privatized so they can survive this harsh business environment, an about-face position compared to that held when he was president of the Nigeria Labor Congress.

Contact Uchenna Izundu at uchennai@pennwell.com.

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