‘Russia, Turkey, China keen on Katsina refinery’

What informed both governments’ consideration to build a pipeline from Niger and a refinery in Nigeria to refine Nigerien crude?

There is already an existing relationship between Nigeria and Niger. Niger shares boundary of over 1000 kilometers with Nigeria from Borno to Katsina, to Jigawa and to Sokoto. Niger has fortunately been blessed with abundance of hydrocarbon. Today, they have a reserve of over 1 billion barrels of crude that has been proven. In addition to that, they are also well blessed with solid minerals but unfortunately they are positioned in a landlocked environment. They have no access to any big ocean through which international trade can be easily transacted and with the existence of crude, the best means of transportation to the international market is the ocean and that Niger is not blessed with. The distance between Niger and the closest river that can take a vessel or ship is about 2005km.

So, since the discovery of oil, Niger has been looking for potential market, incidentally over 40 per cent of the petroleum product consumption in Nigeria is in northern Nigeria. Kano in particular provides the largest consumer state outside Lagos being a commercial city and the distance between Kano and Niger is just 180km maximum. Kano is surrounded by Jigawa, Bauchi, Sokoto and Gombe and they all take their petroleum product from around Kano.

So, based on the bilateral relationship between Nigeria and Niger, one of the options the Nigerien government has been considering is to see how they can bring in their crude into Nigeria because there is a massive market for petroleum product in Nigeria. Today we import over 70% of petroleum products requirement from far away Russia, US and many other European countries.

So, here comes the opportunity. There is the crude that is landlocked looking for market and here is a market in Nigeria that is looking for products.

Nigeria is well favoured because of the distance. To do an 18-24 inch diameter pipeline will cost you about $1.2 to $1.5 billion per kilometer. So, it makes more economic sense to run a crude pipeline into Nigeria at a shorter distance, maximum up to Kaduna which is about 500km from the source of crude. But if you take Katsina it is between 180km down to 500km depending on how far into Niger you are bringing the crude. So, that makes economic sense.

These decisions are just based on our knowledge; they are going to be authenticated and confirmed by internationally reputable consultants who have the wherewithal to do a robust study that will determine the best, convenient, most economically viable location. Part of our mandate is to identify such consultants that will bring in a feasibility study that is bankable.

What is the level of government involvement on the projects?

The projects are private sector driven, government has no intention to put in money but in order to give credibility to the international investors, there would be government support.

If Niger or Nigeria wants to take some minority equity it is going to be open. The beauty of taking minority equity is that government will be obliged to provide the necessary enablers such as security. Typically, what we are looking forward to seeing is something close to the Nigeria Liquefied Natural Gas (NLNG) model where you have people with the majority - in the case of NLNG Shell, Elf and ENI. They have over 51 per cent equity and they have controlling share and number of management. That is why you have robust management without unnecessary and undue influence by government. That is why NLNG is run purely as a business venture. Similar to that we want to see a business venture running so that nobody but the business owner can have the wherewithal to direct the affairs of that business.

This project will see to the reduction of massive heavy duty trucks movement from source of products in the South to the far North and in addition it will see a significant reduction of bridging cost which today government is bearing being managed by the Petroleum Equalization Fund (PEF). There are a lot of benefits that are derivable from this project and I believe the youth will be engaged because economic activity will improve with the new refinery.

There are concerns that the Dangote refinery when it comes on stream, will render Nigerian refineries dormant….?

People are so scared that by the time Dangote refinery is commissioned we will no longer have the need for refineries, far from it. The long term vision of this country is to ensure that all the crude we produce is refined locally. Let us trade with petroleum products rather than sell crude and then bring in products from the same crude that we have sold. Refinery is not just built to meet the immediate need of petroleum products in a country, it is a business.

Has anybody asked what is happening in those countries that don’t have crude oil like Japan? Japan has no crude oil in commercial quantity but has 43 working refineries. They buy crude from the Golf, Africa and all over the world and they refine and export to Malaysia, Singapore, to Philippines and other countries as a business. Why can’t Nigeria have as many refineries as we can have and sell products to anywhere we want to sell the product?

The refinery to Nigeria will have

be sited capacity in to