THE Minister of State for Energy (Petroleum), Mr. Odein Ajumogobia has said that meeting domestic fuel consumption was a big challenge to the administration due to the state of the nation's downstream sector.

Ajumogobia however, lamented the condition of the nation's refineries, ascribing it to the need for further importation of petroleum products.

Besides, he noted that the refineries could only produce about 12 million metric tones at present, which is a far cry from the 28 million metric tonnes per day needed for domestic consumption.

The minister, in a chat with The Guardian recently, explained that this is the government's position on the issue of importation of petroleum products into the country. He said that out of the nation's four refineries, only two are presently working and not at full capacity.

"As I'm talking to you, the country needs a total of 28 million metric tonnes of petroleum products to meet the increasing demand of fuel in the country, but the reason why we ensure that the importation of fuel into the country should be a continuing process is that we can only boast of two refineries presently working, but the total capacity of production is just 12 million metric tonnes per day.

He continued, "Setting up a refinery is a long term plan as it would need about five years to construct a refinery. But I can tell you that we would be importing fuel for a while as we cannot revamp all our refineries now."

Meanwhile, he admitted that the downstream goal of the government is to revitalise all refineries and revamp product supply. This, according to him is being addressed progressively.

Already, the Warri refinery has come on stream and Kaduna has just started, Port Harcourt is receiving procured equipment for the installation and commissioning slated for second quarter of 2008.

Speaking further, the minister said that petroleum would continue to be the major source of energy supply in the world for at least 20 years. In view of this, he noted that Nigeria is strategically aligned with and actively engaged in OPEC to maintain price stability and security of global supply.

According to him, while there may be pitfalls in an overpriced market, a steady run of enhanced crude oil pricing would not necessarily be injurious to treasury of exporting countries but would invariably affect demand in the long run.

He said, "At home, our national aspiration for oil and gas is squarely focused on restructuring the industry to position for major expansion of our rich resource based, improving efficiency of operations and inviting partnerships and foreign investments in both upstream and downstream segments.

He adduced that by 2010, it is expected that the ongoing reforms to separate policy and regulatory functions from commercial operations in the Nigerian petroleum industry would enable the National Oil Company to operate commercially and begin to compete effectively with its contemporary NOCs globally.

"Our objective is to aggressively explore and exploit the huge hydrocarbon potentials in our acreages in order to achieve reserves of four billion barrels and production to four million barrels per day is still in focus. This is in view of government's resolve to empower JV partners and operators to source funds strictly on commercial and investment basis. This will ultimately drive increased activity for both oil and gas exploration and production especially in the deepwater frontiers.

"The fact that our success rate in deepwater exploration is second to none in Africa and in the Gulf of Guinea in particular and highly rated globally is also a strong pointer to the feasibility of the target. In the same vein, the appetite for Nigerian operations is clearly demonstrated by the scramble for oil and more recently gas acreages in the bidding rounds and the substantial signature bonuses have progressively confirmed interest in the Nigerian oil and gas terrains," the minister said.

To him, these increased activities calls for the need to address environmental practices in the operations of the industry and therefore makes it critical for operators and services providers to institute adherence to standards.

"Evidences and the consequences of these continued neglect of the environment stares us in the face today. From the continuous community conflicts to their security implications, indications of the negative impact on the health and well being of the communities as well as the growth of the industry are apparent. So in this regard, the industry must be committed to a new gas flare-out date and continue to work with government and the communities for the integrity of our pipelines and facilities to control emissions. So good environmental management is a prequisitie for positive engagement with communities and a major step towards the reinstatement of security in the Niger Delta," Ajumogobia concluded.