When marginalized communities are faced with problems, they adapt to find solutions of their own. Niger Delta communities in Nigeria have been economically marginalized for decades leading to poverty and massive unemployment, as a result, many young people in these communities are solving their employment problem with materials and knowledge available to them. These young artisans and entrepreneurs have developed indigenous refineries from mere drums to generate income and provide cheaper kerosene and diesel to their communities.
Living in a country that presently cannot refine its crude oil after decades of investing in refineries and petroleum training institutions, these artisan oil refiners despite regular attacks from the government are skilfully using rudimentary equipment and improvised techniques to build refineries whereby a standard artesian refinery produces about forty to sixty drums of diesel a day, i.e. about 10,000 to 15,000 litres per day.
This informal economy is built purely on locally sourced crude oil and distillation skills. The artisanal refining draws on the indigenous technology used to distil locally made gin – ogogoro – from the juice of Raffia palm tree, a technology that has been with them for centuries. Petroleum refining and alcohol distilling are both basically done through a distillation process and the high unemployment in the region in last two decades and the huge demand for refined petroleum product in the region, has made them innovate their liquor distilling technology to petroleum refining technology.
In ogogoro production, drums are constructed to have an opening at the top for feeding in fermented Raffia palm juice, a pipe protruding at the bottom to discharged the residue of the process and another at the top to collect the vaporised alcohol. The palm juice is heated in these drums placed over a fire till the alcohol vaporizes, passes down small pipes through a tank of cold water where it condenses and then drips out into a bucket as a clear, refined gin or Ogogoro. Similarly, the crude oil refineries are simply made up of a large metal drum used for boiling up the crude oil in an open fire. The drums are constructed to have an opening at the top for feeding in crude oil, a pipe protruding at the bottom to discharged by-products into a nearby pit, one or more pipes protruding from the top leading to a tank of water where it condenses and then the refined product drips out into a container.
Using this atmospheric distillation (i.e. at normal atmospheric pressure) method the crude oil is heated gradually until it boils. The petroleum gases and the very volatile products are the first to escape into the atmosphere. Artisan refinery operators are extremely careful at this stage to ensure these escaping gases which are highly explosive does not ignite and cause an inferno. Petrol or gasoline which starts vaporizing below the boiling point of water and boils between 40 to 200 degrees C is the next product that is collected but most of these artisan oil refiners find it difficult to collect the petrol.
Most of the petrol is given off along with the gases, as such, they focus on collecting the more stable middle distillates that boil in the range of 150 – 390 degrees C, such as kerosene and diesel. Kerosene (180 – 290 degrees C) and diesel (200 – 360 degrees C). They are easier and less expensive to produce and also safer to handle than petrol. The other products that no longer vaporize in any way at normal temperatures are as discharged as by-products. The refining process leads to a significant quantity of wastage – two drums of crude oil translate into one drum of refined product.
Another downside of the artisan refinery industry is that it is connected to illegal activities. The crude oil being use in the refineries are stolen from government pipelines, as the Nigerian government which tightly controls crude oil supply and sales in the country has no interest in incorporating these artisan refineries into the formal economy. Also, the entrepreneurs and operators don’t disregard conventional safety standards and their production process heavily pollutes the environment.
However, these downsides are largely due to the socio-political situation surrounding the emergence of these refineries and their illegal status, and less of entrepreneurial or technological ability. It is obvious that under a conducive business environment and friendly local industry regulations even without government financial support, these artisans and entrepreneur can minimise risk, waste and pollution to acceptable levels through better design and business model.
The illegalities can be easily removed if the government simply registers the local refiners, facilitate their capacity building, provide well-equipped lab and workshop where they can partner with scientists and engineers to develop their refinery design and production processes, and sell crude oil to them at subsidizes rate. Environmental and safety issues can be handled by simply creating special regulations for the industry and ensure strict compliance.
Despite calls for the government to encourage the ingenuity of the local refiners by assisting them to build their capacity and develop their crude refineries in line with modern technology and practices, so as to reduce criminality and provide employment opportunities in the region. the local refinery is being destroyed by the federal government. Between January and September alone, the Nigerian Navy destroyed over 1,000 artisan refineries in the Niger Delta. This destruction has been going on since 2015 about when the government officially classified the refineries as” illegal refineries”.
But due to political reasons and the country’s governments’ persistent disregard for a bottom-up or community-driven approach to innovation and development. This government has no intention to support the people’s own creativity and ideas but rather the government is determining to destroy their innovation and bring in expensive ‘top-down’ innovations from developed countries. Just the same way, both the colonial British and presently the Nigerian government suppressed the local ingenuity of the Ogogoro distillers in the same region and illegalise their activities for decades while promoting foreign liquor brands. Today, the formal liquor market in Nigerian is dominated by foreign brands and the Ogogoro distillery industry in the country remains crude as it was 50 years ago. It was never developed.
The Nigerian government is currently struggling as usual to create economic opportunities in the region that can compete with the economic benefit derived from local refining. The so-called illegal refining is now one of the biggest sources of youth employment in rural Niger Delta, a single site that produces around 11,000 litres of diesel per day engages almost 400 workers. These group of young individuals without formal education or bank loan are springing up refineries of this quality faster than they are being destroyed.
Since 2015, the government had been working on replacing these entrepreneurs and their artisan refineries with expensive modular refineries from China. The Spokesperson for the Federal Ministry of Petroleum Resources said, a modular refinery project requires capital up to about $100million (N36 billion) and to get a government licence individuals are required to come together and get a foreign partnership. The sector is over-regulated and the 38 investors who have been given licence to strip modular refineries are having cold feet. The government has even gone ahead to secure a $500 million dollars (N179.9 billion) loan from China for the investors.
The Chief of Naval Staff was reported to have said an artisan refinery being destroyed cost “nothing less than N5 million to set up, excluding the boats and other assets. Using the N5 million estimated as the cost of setting up a local refinery, the N36 billion capital requirement for a modular refinery is enough to significantly develop the whole artisan refining technology and industry in a bottom-up approach.