Citing complications in revamping the Port-Harcourt, Warri and Kaduna refineries, the Nigerian National Petroleum Company Limited (NNPCL) has revealed that the facilities could be sold off.
The decision came after the moribund refineries had allegedly gulped about $18 billion in turnaround maintenance.
The NNPCL Group Chief Executive Officer (CEO), Bayo Ojulari, disclosed the possible sale of the refineries on the sidelines of the Organisation of Petroleum Exporting Countries (OPEC) International Seminar in Vienna, Austria on Thursday.
Ojulari, who spoke with Bloomberg, said the NNPCL was reassessing its refinery strategies and aiming to finalise the review by year-end. “So, refineries, we made quite a lot of investment over the last several years and brought in a lot of technologies. We’ve been challenged”, he said.
He explained that some of the technologies had not worked as expected, adding, “When you’re refining a very old refinery that has been abandoned for some time, what we’re finding is that it’s becoming a little bit more complicated. So, we’re reviewing all our refinery strategies now. We hope that before the end of the year, we will be able to conclude that review. That review may lead to us doing things slightly differently”.
Speaking on the possible sale of the assets, he said: “What we’re saying is that sale is not out of the question. All the options are on the table, to be frank. But that decision will be based on the outcome of the reviews we’re doing now”.
Commenting on oil production costs, Ojulari hinted further that the operating cost of oil production in Nigeria ranged between $20 and $30 per barrel. He added that by the end of the year, the country planned to increase output to 1.9 million barrels per day, (bpd).
Recall that the Federal Government has consistently expended resources on the refineries, which went moribund many years ago. It was gathered that $1.4bn was approved for the rehabilitation of Port Harcourt refinery in 2021; $897m was earmarked for Warri and $586m for Kaduna refineries.
₦100bn was reportedly spent on refinery rehabilitation in 2021, with ₦8.33bn monthly expenditure. $396.33m was spent on Turn-around Maintenance (TAM) between 2013 and 2017. Despite all the financial allocations, the refineries remain unproductive at the moment.
The NNPCL could not be reached at the moment. Despite not having a spokesman at the moment, the contacts on its website were not reachable as of the time of filing this report.
