1. Speaker: Engr. Abdullahi Sule. MD / CEO African Petroleum Plc (AP) Formely: British Petroleum (BP) AP is one of the 6 major Petroleum Marketing Companies in Nigeria. Others are Total, Oando, Mobil, Texaco & Con Oil. AP is the 3 rd largest with over 400 retail outlets.

2. TOPIC: DEVELOPMENTS IN NIGERIA’S REFINERY INDUSTRY Brief summary of Nigeria’s oil & gas industry: Population of Nigeria is over 130 million Oil & Gas exploration began in the early 1950s First commercial discovery in ‘Oloibiri’ in 1958 Biggest exporter of crude oil in Africa Current daily production of crude oil is over 2.5 million barrels Member of the ‘Organisation of Petroleum Exporting Countries’ (OPEC)

3. Oil & Gas Summary in Nigeria cont’d: Four state-owned refineries Over 5000 km of integrated pipeline network 23 strategic depots Over 5000 retail outlets Major Road and Marine distribution system

4. Table 1Source: Nigerian National Petroleum Corporation NIGERIA’S CRUDE OIL PROCESSING CAPACITY. * Port Harcourt Refinery, built in 1965, with installed capacity of 35,000 bpd, was operated and managed by SHELL-BP before ownership was passed to the Nigerian Government in 1970. S/N REFINERYDATE COMMISSIONED INSTALLED CAPACITY 1* PORT HARCOURT PH (EXPANDED) 1965 1971 35,000 60,000 2 WARRI 1978 125,000 3 KADUNA 1980 110,000 4 PORT HARCOURT II 1989 150,000 5 TOTAL 445,000

5. REFINERY FEEDSTOCK & PRODUCT SLATE Mostly locally sourced crude oil – Bonny Light, Escravos Light and Forcados Blend. Allocated about 300,000 bpd of crude oil at import parity price Refineries product Slates:- Premium Motor Spirit (PMS), Automotive Gas Oil (AGO), Dual Purpose Kerosine (DPK), High Pour Fuel Oil (HPFO), Low Pour Fuel Oil (LPFO), Liquified Petroleum Gas (LPG), Bitumen, Base Oil, Parafin Wax and Sulphur.

6. PRODUCT SLATE Cont’d: PETROCHEMICALS: Linear Alkyl Benzene – Kaduna Refinery Polypropelene and Carbon Black – Warri Refinery. Petrochemical Plants integrated with Kaduna and Warri Refineries in 1988.

7. Chart 1Source: Nigerian National Petroleum Corporation CRUDE OIL RECEIVED BY TYPE (1997 – 2002)

8. Chart 2Source: Nigerian National Petroleum Corporation CRUDE OIL PROCESSED BY TYPE (1997 – 2002)

9. REFINERY UTILIZATION / PERFORMANCE. Basic Objective:- To refine crude oil to meet local demand and export the excess. Pre-199, recorded above average capacity utilization Post 1997, poor capacity utilization - between 22.29% and 49% for period 1997 – 2002 High ratio of imported fuels Currently supply about 25% of the 30 million litres of PMS daily local consumption Most of the refined gasoline is leaded Low capacity utilization caused by: poor funding, equipment obsolescence, inadequate maintenance and poor management

10. Chart 3Source: Nigerian National Pertoleum Corporation REFINERIES CAPACITY UTILIZATION:1997 – 2002.

11. Table 2aSource: Nigerian National Petroleum Corporation WHITE PRODUCTS’ SUPPLIES FROM DOMESTIC REFINERIES & IMPORTS IN ‘000 MT. PMSDPKAGO YEARDOM. REF IMPORTTOTAL% IMP. CONT DOM. REF IMPORTTOTAL% IMP. CONT. DOM. REF IMPORTTOTAL% IMP. CONT. 903724.53479.934204.4611.411928.78297.132225.9113.352734.310 0 913644.451020.214664.3621.871886.6276.192162.812.773006.830 0 923857.311517.945375.2528.241817.74592.022409.7624.572854.1340.192894.321.39 933561.821795.375357.1933.511676.98661.462338.4428.292820.19742.863563.0520.85 942216.492008.364224.8647.541067505.471572.4732.151862.05269.732131.7912.65 952691.991478.494170.4835.451449.85602009.827.862270.13103.52373.634.36 962457.071925.444362.5143.931516.33753.352269.6833.192105.653572462.651.45

12. Table 2bSource: Nigerian National Petroleum Corporation WHITE PRODUCTS’ SUPPLIES FROM DOMESTIC REFINERIES & IMPORTS IN ‘000 MT. PMSDPKAGO YEARDOM. REFIMPORTTOTAL% IMP. CONT DOM. REFIMPORTTOTAL% IMP. CONT. DOM. REFIMPORTTOTALIMPOR T CONT R. 972676.961061.863738.8228.41466.750 02353.22185.32538.527.3 981450.732507.013957.7463.341132.22655.621787.8436.671610.73515.962126.6924.26 991662.951987.473650.4254.441278.7171.481450.1811.821814.04465.252279.2920.41 20971.624144.355115.9781.01661.741155.41817.1163.581048.061952.733000.7965.07 012595.993857.096453.0859.771627.3460.772088.0722.072522.39148.932671.325.58 022603.394036.486639.8760.791532.41404.91937.3120.92515.8794.352610.223.61

13. Chart 4Source: Nigerian Natinal Petroleum Corporation % CONTRIBUTION OF IMPORTED PRODUCT TO SUPPLIES (1999 – 2002) ‘000MT

14. Chart 5Source: Nigerian National Petroleum Corporation PETROLEUM IMPORTS (1997 – 2002)

15. Chart 6Source: Nigerian National Petroleum Corporation PETROLEUM PRODUCTS’ SALES (1997 – 2002)

16. CURRENT DEVELOPMENTS Privatisation of Refinery Industry License already issued to some prospective private refinery investors Existing state-owned refineries already slated for privatisation through the nation’s Bureau for Public Enterprises Government, through the Bureau for Public Enterprises (BPE) under a leading adviser, Credit Sussie First Boston, New York, has offered for sale 51% of each of the refineries’ shares to core investors, while the remaining 49% shares will be sold to the Nigerian public and refinery staff

17. CURRENT DEVELOPMENTS Cont’d. Refurbishment of existing state-owned refineries to boost capacity utilization to 60% of local fuel demand latest June, 2004 before their final privatisation One of the licensed private refinery investors, we learnt, has begun construction process

18. CONCLUSION Sector reform in the Refinery Industry is: To encourage private initiative, investment, ownership and management To ensure sustainable efficiency and deepened growth in the downstream sector of the industry To foster human capital development and competency To ensure global competitiveness through technological advancement and proficient management To dismantle the state initiated monopoly via Nigerian National Petroleum Corporation and open up the space for healthy local competition

19. CONCLUSION Cont’d. Government involvement in the refinery industry and downstream sector of the oil industry generally, is expected to be limited to policy formulation and fiscal matters Non-discriminatory / open process to state-owned facilities and infrastructures I.e. pipeline network system, strategic storage depots before their privatisation is expected Open access to local crude oil / crude oil importation for refinning is also expected On going developments in the Retail Marketing Sector of the downstream industry.

20. CONCLUSION Cont’d Government’s resolve to privatise and deregulate the downstream sector of the oil and gas industry could be the needed elixir for harnessing and exploiting the vast potentials of this great nation with with ever expanding markets. Attainment of sustainable efficiency will, no doubt, infect other sectors positively for as long as petroleum products remain relevant to industrial and economic growth. Thank you.