Niger’s first oil refinery produces only 10,000 barrels per day despite having double the capacity, due to high oil prices pushing the refinery out of competition.

The refinery – which is a joint venture 60 percent owned by Chinese state-owned company CNPC, 40 percent owned by the state of Niger, and operated by the Chinese company – has a capacity to produce 20,000 bpd, but its output measures only half of that figure, revealed the country’s Oil Minister Foumakoye Gado to Reuters.

Located at Soraz in the Zinder region to the south of Niger, the refinery was inaugurated on November 28th, 2011, in an effort to make the country fuel self-sufficient.  It was intended that one third of output from the refinery’s three wells at the Agadem oil field would be spent on domestic needs, and the remaining resources would be exported to other countries.

However, the country has not been able to achieve low enough oil prices to make the refinery’s output competitive on a regional level, necessitating a reduction in the rate of production.

Niger has not been able to attract custom from its neighbouring countries due to the high prices attached to Niger’s oil – currently set at 360 Central African Francs ($ 0.71) per litre -, causing the country’s hopes as to export revenue to largely fail.

The Minister said: “The countries of the sub-region – Mali, Burkina Faso, Nigeria – want to come buy in Niger, but on the condition that they gain something … They have to earn something, even if it’s one franc per litre.”

Steps have been taken to lower oil prices in the country, including the Chinese company involved agreeing to cut interest rates on the Chinese-provided loan that funded the construction of the plant.  Following the interest-reduction by CNPC, Niger’s government announced a decrease in oil prices of as much as 7 percent to be implemented as of the New Year.  However, the deduction met little positive response, with fuel truck drivers and tax drivers displaying unrest.

Local taxi drivers announced a price hike of up to 50 percent due to unmaintainable fuel prices, while truck drivers went on a five-day strike over delays in oil loading at the partially functioning refinery.

At the inauguration of the Soraz plant in November 2011, it had been expected that a second phase of construction would be completed by 2014, providing the plant with a bespoke pipeline to facilitate oil exports.

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