We explained the establishment of Modular Refinery and Licensing requirements in Nigeria. It also covers the official financial cost, the three stages of licensing and processes. You can contact us for your Consultancy services.
It also highlight some important general and technical requirements for interested investors in refineries to enable smooth implementation of the initiative.
Definition:
A Modular Refinery (Hydrocarbon Processing Plant) in Nigeria is a licensed refinery that has the production capacity of between 1,000 Barrels Per Day to 30,000 Barrels Per Day. Any capacity above this is considered as conventional refinery.
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Modular Refinery Licensing (1000 BPD – 30,000 BPD) Applicable Official Fees
| S/N | License name | Applicable Official Fees | Amount |
| 1. | License to Establish (LTE) | Statutory fee | USD 50,000.00 |
| Authority Processing Fee | N500,000.00 | ||
| 2 | Authority to Construct (ATC) | DPR processing fees | N500,000.00 |
| 3 | License to Operate (LTO) | Statutory fee | USD 1,000 |
| Authority processing fees | N500,000.00 |
Top points: Modular Refineries In Nigeria Requirements, Key Objectives of the Modular Refinery Initiative , Scope, Technical Specification , Financial Status, Fiscal Incentives , Government Support, Community Involvement , Qualification Requirements, Investors Category, Modular Refinery Business Model, Location and Carrying Capacity, Legal Framework.
Timeline of Activities for Modular Refinery Establishment
Key activities and the process for selection are outlined below:
| S/N | ACTIVITY | DATE | REMARK |
| 1 | WORKSHOP: – Organized for interested Companies/Investors in Modular Refinery Establishment | To Be Advised | Objective to educate companies/ investor on expectations, the processes and conditions to set up modular refineries. |
| 2 | SUBMISSION OF APPLICATIONS: – Applications forms and the Guidelines | 2 – 3 months after workshop | Interested companies/investor submits applications and requirements for LTE as listed in the Guidelines. |
| 3 | TECHNICAL EVALUATION: – Evaluate applications and submit report by date | 1 month after submission | Objective to analyze and weigh the technical capacities and capabilities of the companies. |
| 4 | PUBLISH REPORT OF SUCCESSFUL COMPANIES: – Accept report and make public | 2 weeks after evaluation | Only qualified technical submissions published and deemed to have passed LTE |
Read: Nigerian Content Policy
Key Objectives of the Modular Refinery Initiative
• To promote availability of petroleum products in the country.
• To conserve foreign exchange utilization for the importation of Petroleum Products.
• To promote socio economic development in order to stop restiveness, criminal and illegal refinery activities thereby sustaining peaceful coexistence in the Niger Delta Region
• To mitigate and eliminate environmental degradation associated with illegal refinery activities, crude oil theft and pipelines vandalism.
Legal Framework
The process for establishing a Petroleum Refinery in Nigeria is regulated by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) through Polices and Regulations promulgated by the Ministry of Petroleum Resources and Minister of Petroleum Resources respectively. The regulatory procedure is contained in the Petroleum Industry Act (PIA).
Consequently, Nigerian Upstream Petroleum Regulatory Commission (NUPRC) provides the guidelines that shall apply for the establishment of Hydrocarbon Processing Plants and also issued an addendum “Supplementary guidelines for the Design, Construction and Operation of Modular (mini) Refinery Plants in Nigeria” which details mandatory requirements, processes and procedures that will significantly simplify
compliance.
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Scope
The guidelines shall cover all refinery establishment. However, establishment of modular refinery plants, shall be with design capacity not more than thirty thousand barrels per day (30,000BPD). When the plant capacity exceeds 30,000BPD, the plant shall be upgraded to a full conventional refinery.
Location and Carrying Capacity
The location of a modular refinery shall be strategic and influenced by proximity to the source of crude oil, producing marginal fields and tie-in to supply infrastructure or clusters
Government also recognizes that there is a limit on the carrying – capacity in each of the oil producing states, consequently, establishments would be based on the acceptable carrying capacity indices of each state which is determined by the production capacity, access to infrastructure and limit of the environmental degradation.
Read: Local Content Partnership
Modular Refinery Business Model
Government envisages amongst others, a model that will be private-sector led partnership with equity participation from the state government or its agencies, registered local cooperative societies and the integration of the regional refinery stakeholders, with the private investor having majority equity as well as operate the Joint Venture.
State Government contribution could be in the form of land-for-equity and or paid off shares.
Investors Category
The Federal Government seeks the participation of credible investors and integration of key stakeholders in the modular Refinery initiative. The size of the investment structure will determine significantly the investor categorization and selection process.
The prospective investors will be categorized as follows:
A. Private Investor with financial and technical capacity, preferably with established Nigerian presence or partnership
B. Public-Private Partnership with credible participation from relevant stakeholders such as foreign technical partners, State Government, MDAs, Local Govt. Council, organized private organizations, cooperative societies, community equity contribution etc.
C. Regional refinery stakeholders involved in artisanal activities with focus to converting the vocationally acquired skills to cognitive technical skills. They shall be considered for equity partnership with technical and financial partners.
Read: NUPRC (DPR) Permits & Requirements
Modular Refinery Licensing Requirements in Nigeria
Note: the Modular Refinery Licensing general requirements is for refinery that has the production capacity of between 1,000 Barrels Per Day to 30,000 Barrels Per Day.
The licensing processes as prescribed below for the establishment of Hydrocarbon Processing Plant in Nigeria by the authory are in three phases namely, License to Establish (LTE), Authority to Construct (ATC), License to Operate (LTO).
To qualify and move between phases requires certain criteria to be satisfied. The general and technical criteria/ requirements which interested investors must satisfy.
General Requirements for Modular Refinery Licensing
a) Institutional Framework – Company and Organizational Structure
Evidence of CAC registration for Nigerian companies/entities, foreign companies evidence/reference by Home Country’s agency. For consortium partnership, foreign and local companies must meet standard criteria and present legal documents of partnership,
certified true copies of Memorandum and Article of Association, Evidence of joint venture/partnership Agreement, Company Profile etc.
b) Financial Status
Three (3) years Audited Account, Financial report and Tax Certificate for Nigerian companies and similar documentation for foreign companies, paid up share capital, Investment Type, Detailed financial plan with Proof and source of funding, sworn affidavit
and letter of authority allowing verification of all claims
c) Community Affairs, Safety, Health, Environment and Security (CASHES)
Health, Safety and Environment (HSE) Plans, Quality Management System, Security Plans, Management of Change Procedure, Community Affairs and Corporate Social Responsibility Plans.
d) Nigerian Content
Applicants will be required to maximize the utilization of local human and material resources in line with Nigerian content requirements.
Read: FG FINANCIAL SUPPORT FOR MODULAR REFINERY IN NIGERIA
Modular Refinery Technical Specification
a) Plant Philosophy Model
The requirement is as outlined in DPR guidelines for the establishment of Hydrocarbon Processing Plant and the Supplementary Guidelines for Modular Refinery Plants. Investors are expected to demonstrate a positive crack spread for the chosen refinery design.
This includes but not limited to the following: Plant description and configuration, — desired output, management of light products and by-products (Gasoline, Naphtha, LPG & Heavy-ends), Details of marketing plan/strategy, Details of technology, Crude assay and
Source, Front End Engineering Design etc.
b) Age of Modular Refinery to be located
An applicant shall not be allowed to relocate a refinery that is older than Ten (10) years in operation from the date of establishment.
Where the refinery has not been in operation since establishment and well preserved, subject to verification, it should not be older than 15years from the date of establishment.
The authory will provide a plant technical audit checklist for this purpose.
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Community Involvement in Modular Refinery
The process of integrating the regional community stakeholders into the scheme shall involve the following activities to be anchored by the relevant State Government or its agencies using their local structures:
a) Verification of community participants: This involves the screening and capturing of data for indigenes interested in gainful employment in the refineries and small medium enterprise activities.
b) Training: Focus on formally converting community stakeholders who have acquired vocational skills to cognitive technical skills.
c) Business Integration: Integration of this stakeholders as equity participants in the refineries as defined in Investor Category C.
Government Support in Modular Refineries
The Federal Governments assistance in the establishment / Conventional of a modular refinery will
include:
a. Facilitation of crude commercial agreements from marginal and other oil fields.
b. Facilitation of Ownership-joint venture investment vehicles with organized host communities and State Governments.
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