The Tema Oil Refinery (TOR) has described as ‘false’ a publication by the Institute of Energy Security(IES) that the refinery is incurring losses to the tune 24 million dollars.
Management of TOR in a press statement issued on December 3rd, 2018 said the projections by IES which concluded that the refinery was making losses due to drastic reduction in the prices of crude oil on the international market does not hold.
According to TOR, IES calculations are “based on flawed assumption that there is a direct correlation between the drop in global prices and the price of TOR products on the local market”.
“For the avoidance of doubt, a fall in the international crude oil price does not necessarily correspond to an equal degree of fall in the prices of petroleum products”.
The statement further pointed out that IES’s claim that TOR did not employ suitable techniques in managing the risk of a fall in prices are untrue.
It explained that “whereas the volatile nature of crude oil prices lies beyond the control of Tema Oil Refinery, any potential price risk arising from such volatility is however mitigated in a special arrangement with our suppliers”.
The statement continued that contrary to the claims by IES, the interest of local off-takers in TOR products are paramount.
It maintained that TOR has sold some of the already refined products to both local and foreign entities with additional pipeline efforts for the export of TOR products remaining unchanged.
This TOR said debunks the notion by IES that there is ‘stranded products’ sitting in TOR tanks.
“Management of TOR refutes the various allegations which were contained in the said IES article. We take this opportunity to advise IES not to jeopardize the long term business module between TOR and our strategic partners with stories that cannot be substantiated”.
IES alleged that the Tema Oil Refinery (TOR) was to lose about 24 million dollars in revenue due to drop in global prices of refined products.
The energy think tank attributed the development to an ineffective business model despite TOR producing refined products.
The projection follows the Tema Oil Refinery’s processing of 950,000 barrels of crude purchased from Nigeria, in October 2018.
This led to the production of some refined products such as diesel, atk, LPG, atmospheric residue which is further refined to obtain gasoline.
However, IES said the absence of buyers has left most of the products in tanks.
The IES stated that even if TOR decides to sell off its products, it will have to do so at the prevailing prices where global prices have dropped.