Pronouncements by Group Managing Director of Nigerian National Petroleum Company Limited (NNPCL), Mele Kyari, and a former Minister of State for Petroleum, Timipre Sylva, giving dates for the commencement of operations of at least of the nation’s refineries have become unexciting to Nigerians. This is because the officials had many times given the nation hopes and dates for the commencement of operation of, at least, one of the re- fineries, but those promises are yet to materialized. Kyari, on June 1, 2023, said the administration of President Bola Tinubu had concluded plans for one of the four refineries to be repaired and operating at an optimal level be- fore the end of 2023…..CONTINUE READING...CONTINUE READING
Nigeria’s refineries
The nation’s four refineries now owned by the NNPCL, regrettably, are not currently functional. The Port Harcourt Refining Com- pany Limited (PHRC) comprises two refineries at Alesa-Eleme near Port Harcourt in Rivers State with a jetty (for product import and export). At inception, It had the capacity to process 150,000 barrels of crude per day but was later upgraded to 210,000 barrels per day. The Warri Refining and Petro- chemical Company was built to pro- cess 100,000 barrels of crude oil per day but was later de-bottlenecked in 1987 to process 125,000 barrels per day. The Kaduna refinery was de- signed for a capacity of 60,000 BPSD but later the Federal Government decided that the capacity of any re- finery in Nigeria should not be below 100,000 BPSD. The report has it that Nigeria spent about $25 billion on turn- around maintenance of refineries in the past 25 years.
Buhari’s award of rehabilitation contract
Meanwhile, the administration of former President Muhammadu Bu- hari awarded contracts for the TAM of the refineries. After the approval, the NNPCL awarded the contracts for the reha- bilitation of the Port Harcourt Refin- ery to Tecnimont at $1.5 billion and the repairs of the Kaduna Refinery to Daewood at $741m, while $897,678,800 was budgeted for the Wari Refineries. NNPCL had in April 2021 signed a contract with an international com- pany, Maire Tecnimont SpA, for the rehabilitation of the Port Harcourt Refinery Company, after the Federal Executive Council had approved the contract. It was gathered that the project en- tailed engineering, procurement and construction (EPC) activities for a full rehabilitation of the Port Harcourt refinery complex, so as to restore the complex to a minimum of 90 per cent of its nameplate capacity. It was learnt that the complex com- prises two refineries of a total capac- ity of approximately 210,000 bpd (bar- rels per day).
Ex- minister’s pronouncement
The then Minister of State for Petroleum, Timipre Sylva, said the project would be completed in three phases, the first within 18 months tak- ing the refinery to 90 per cent produc- tion capacity, while the second carried out within 24 months and the final phase carried out within 44 months.
Buhari’s statement
On Oct 27, 2022, a former Special Adviser to ex-President Buhari on Media and Publicity, Femi Adesina, in a statement, said the NNPCL had signed a memorandum of under- standing (MoU) with a South Ko- rean conglomerate, Daewoo Group, for the rehabilitation of the Kaduna refinery. According to a statement by the agreement was signed on the side- lines of the 2022 World Bio Summit in Seoul, South Korea. The statement said then President Buhari, who witnessed the signing ceremony and was excited as it came against the back of ongoing rehabili- tation work at Warri refinery. “Daewoo Group has massive investments in the automobile, maritime and other sectors of our economy,” Adesina quoted Buhari as saying. However, on February 2, 2023, NNPCL also announced that it had signed a $741 million deal with Dae- woo Engineering & Construction Nigeria Limited for the rehabilita- tion of the Kaduna Refinery & Petro- chemical Company (KRPC) Limited with a duration of Twenty-One (21) months. The agreement was signed at the NNPCL headquarters in Abuja. The NNPC said that under the terms of the agreement, Daewoo will restore production at the 110,000 barrels-a-day facility to at least 60% of its capacity by the end of 2024. NNPCL confirmed the develop- ment via a post on its official Twitter handle@nnpclimited. It twitted: “NNPCLimited’s Ka- duna Refining & Petrochemical Company Ltd (KRPC) & Daewoo Engineering & Construction Nige- ria Ltd. signed a contract for mainte- nance services for quick-fix repairs of KRPC.” The Kaduna Refinery has a 110,000 bpd capacity of refining.
More Promises From NNPCL
The NNPC Executive Vice President, Downstream, Adeyemi Adetunji, during the signing of the agreement, said it was a great honour that they signed the main- tenance service contract for the refinery. He stated that the project was framed after extensive engagement with Daewoo on the quick-fix strat- egy to repair and re-stream KRPC and operate it on a sustainable basis at a minimum capacity utilisation of 60 per cent. He said: “This marks a milestone in the history of KRPC considering that the last Turn Around Main- tenance (TAM) on the refinery oc- curred about fifteen (15) years ago. “This project shall be executed in three work packages as a Main- tenance Services contract by Dae- woo E&C Nigeria Limited at an estimated maximum cost ceiling of $740,669,600.00 with a duration of Twenty-One (21) months. “The quick-fix strategy guaran- tees the fastest route to restream- ing Warri Refinery Petrochemical Company (WRPC) and KRPC for in-country production of refined petroleum products.” The Federal Executive Council (FEC) had in August 2021, approved the sum of $1.4 billion for the re- habilitation of Warri and Kaduna refineries. Kyari in Abuja on June 1, 2023, said there is an ongoing process of rehabilitation to ensure that one of the four refineries will begin opera- tions before the end of 2023.
Ex-Minister’s December 2022 promise
Also, Sylva had, on September 15, 2022, said Nigeria’s biggest refinery (Port Harcourt Refinery) would be- come functional by December 2022. He spoke while briefing jour- nalists after the Federal Executive Council meeting in Abuja. Sylva said: “As we said earlier, the old refinery in Port Harcourt, which is about 60,000 barrels per day capac- ity, will be functional by December and, of course, we still have some time in the contracting time to con- clude the rest of the Port Harcourt refineries.” He added that works in the Ka- duna and Warri refineries were also progressing well. “We will soon be embarking on an inspection visit and some of you, journalists, will be able to go with us to ascertain for yourselves what the extent of work is,” he said. In addition, on January 9, 2023, Sylva recanted and said the rehabili- tation of the 60,000 bpd refinery was being completed and was going to start operation by the first quarter of 2023. He spoke while giving an update on the Port Harcourt refineries during the Ministry of Petroleum Resources 2022 scorecard in Abuja. He said that the promise made was not to complete the rehabilita- tion of the refineries by May 2023, but that the fuel plant will be reha- bilitated by the end of Q4’22. “Our promise has been that the 60,000 bpd plant within the Port Har- court refinery by the end of Q4 2022, it is being completed and is going to be started by the first quarter of 2023 as promised,” he said. Also, Kyari had assured Nigeri- ans of NNPCL’s resolve to complete the ongoing rehabilitation of Port Harcourt Refinery by March 2023. This did not also happen. On Feb 2023, NNPCL’s Execu- tive Vice President, Danladi Inuwa, equally told the nation that the Port- Harcourt refinery would begin oper- ations by the second quarter of 2023. He spoke in Abuja, at a workshop, with the theme: “Understanding Our National Oil Company Post- Petroleum Industry Act.” He noted that contracts for the quick rehabilitation of the Warri and Kaduna refineries had been awarded. He stated that the com- mencement of operations of the nation’s refineries will reduce the scarcity of Premium Motor Spirit (PMS) otherwise called petrol or fuel and increase dependence on natural gas. According to him, the Port Har- court refinery was nearing comple- tion and should be ready before the end of the second quarter of 2023. It also missed the April 2023 target.
MOMAN
Chairman of the Major Oil Mar- keters Association of Nigeria (MO- MAN) Mr. Olumide Adeosun, said the officials of FG and NNPCL made the pronouncements in good faith and with good intentions. He, however, noted that some- times, high-level expectations were different from reality. He said it would be good for Nige- ria to have a refinery or more that is not owned by an individual. Adeosun said: “Projects in them- selves, especially large capital infra- structure projects, are usually quite complex, have a lot of independently moving parts, a lot of technical and financial components to them. Look at the way the upstream works. “There is a lot of work and a lot of planning, and they will run into papers so many times that they will pull out of the project plan based on all the scenarios involved. I am sure that both the Minis- ter, the NNPCL and everyone who has commented were speaking with the best intentions but they were not the project people. Sometimes, high-level expecta- tions are usually different from reality. I think there is an alignment. “From the little, I know as the Chair- man of MOMAN, a lot of work is going on in the background. I will not speculate on a date for you because I just do not know. And I am not in the speculation business. I am in the reality business. I do not know but I do know that there is a serious focus area. I pray, for the sake of Nigeria, that something is able to come out of this. “Similarly because we do not have the line of Dangote. We just want to have a re- finery work, even the psychological boost of knowing that we can produce gasoil in-country, it will provide hope for Nige- ria. That is what we need to do, providing hope for Nigerians. We really really do. We have to give them something that they can touch and say okay, at least something is happening. We really need to make sure that sufficient planning and execution are done to actualize the refineries working.
Last word
“My hope as well is that all of the good work that is going on at the back- ground, in spite of the missed deadline announcement, they can deliver some- thing for us as soon as possible. It is just a misalignment of what we would like to happen and what is really happening or what is to happen…..CONTINUE READING
