Diri, Obasanjo Demand Increase in 13% Oil Derivation as $1bn Azikel Refinery Advance

Bayelsa State Governor Douye Diri and former President Olusegun Obasanjo have renewed calls for an increase in the 13 per cent derivation allocation to oil-producing states, arguing that the current arrangement does not adequately compensate the Niger Delta for the resources extracted from the region.

They made the call on Monday at the inauguration of the Crude Distillation Unit of the $1bn Azikel Refinery in Obunagha, Yenagoa Local Government Area of Bayelsa State. Obasanjo also challenged the project’s promoter, Dr Azibapu Eruani, to complete the refinery within the next 12 months.

Diri said oil-producing communities continued to bear the environmental and social costs of petroleum extraction without receiving commensurate benefits. He urged the region to play a greater role in petroleum processing and industrial development.

“As people of the Ijaw ethnic nationality, we have protested and fought because we feel that God gave us something in our land, but we are not benefiting from it. Others are benefiting and see us as second-class citizens,” the governor said.

He argued that the struggle for resource justice had continued for decades because communities in the Niger Delta believed they were not receiving adequate benefits from the natural resources extracted from their territories.

Diri also criticised the existing resource-control framework, particularly the Land Use Act and the derivation formula, saying oil-producing states deserved a greater role in determining how their resources were managed and the benefits distributed.

“The Land Use Act is unfair. Surface resources belong to states, but what lies underneath belongs to the Federal Government. That law is obnoxious and not good for any just society,” he said.

The governor added that oil-producing states were not seeking to take all the benefits but wanted a greater role in decisions affecting their resources. He described the existing 13 per cent allocation as insufficient.

Diri Urges Youths to Prepare for Refinery Jobs

Diri described the Azikel Refinery as an important step towards expanding the Niger Delta’s participation in the petroleum value chain. He commended Eruani and the Azikel Group for investing $1bn in the project.

He also urged Bayelsa youths to acquire technical and vocational skills to prepare for potential employment opportunities when the refinery becomes operational.

The governor called on oil companies operating in the Gbarain-Obunagha area to rehabilitate the road leading to the refinery, stressing that supporting infrastructure would be essential to industrial development.

Obasanjo Sets 12-Month Completion Target

Obasanjo commended Eruani for his vision and entrepreneurial commitment, expressing satisfaction with the progress made since he laid the refinery’s foundation stone eight years ago.

He challenged the Azikel Group president to complete the facility within 12 months, expressing hope that it would become operational before his 90th birthday in March 2027.

“My challenge to you, Dr Eruani, is to ensure that the refinery is completed within the next 12 months. With this done, you can even double the capacity,” Obasanjo said.

The former president also supported calls for an increase in the derivation allocation, describing the current 13 per cent share as a starting point for further discussions.

“You are right that the states and oil-producing communities have not got a fair deal so far. Thirteen per cent is the beginning. You can continue to talk,” he said.

Obasanjo commended Diri for supporting the project and praised the African Finance Corporation and the African Export-Import Bank for their financial backing, alongside the technical and engineering teams involved in the development.

Azikel Refinery Targets Millions of Litres of Fuel Daily

The refinery, owned by Azikel Petroleum, a subsidiary of Azikel Group, is designed to produce 2.5 million litres of petrol and two million litres of diesel daily, alongside other refined petroleum products.

The Crude Distillation Unit is a key component of the facility. It separates crude oil into different fractions for further processing into usable petroleum products.

When completed and operational, the refinery is expected to expand domestic refining capacity, create jobs, stimulate supporting businesses and increase local value addition in the petroleum industry.

Speaking at the event, Eruani said the project was conceived to transform the Niger Delta from a region known mainly for crude oil production and exports into a centre for refining and industrial development.

He described the inauguration as a major milestone and thanked President Bola Tinubu, Diri, the supporting financial institutions, contractors and technical partners for their contributions.

A board member of Azikel Petroleum, Dr Daru Owei, and the Ibenanaowei of Ekpetiama Kingdom and Chairman of the Bayelsa State Council of Traditional Rulers, King Bubaraye Dakolo, also commended Eruani’s investment.

They expressed optimism that the refinery would contribute to economic growth in Bayelsa, the Niger Delta and Nigeria by expanding industrial activity and creating opportunities for local participation in the petroleum sector.