Page 5 - AfrOil Week 30 2021

AfrOil COMMENTARY AfrOil

The progress will mark a welcome improvement contract for operations and maintenance
for NNPC, whose entire 445,000 bpd refining (O&M) services for its four refineries. The scope
capacity has been shut in for nearly two years of work will include short- and long-term pro-
following failure to carry out appropriate turn- duction and operations planning, production
around maintenance (TAM) for four decades. and operations execution, monitoring, and
reporting and optimisation of operations.
State slate This will involve process and control engi-
The Port Harcourt complex is comprised of two neering, quality control, quality assurance and
units, built roughly 25 years apart, with their laboratory, environmental management and
combined capacity making it Nigeria’s largest planning and execution for long-awaited TAM.
refinery. However, criticism has been levelled at the
PHRC as well as the smaller Kaduna (110,000 government for paying for a refurb before pri-
bpd) and Warri (125,000 bpd) units have typi- vatising the units. NNPC’s entire
cally run at less than 10% of capacity in recent Atedo Peterside, founder and CEO of Stanbic 445,000 bpd
years. NNPC noted in mid-2019 that the refin- IBTC Bank, said the government “should halt”
eries were operating at just 5.55% of their capac- its plans and “subject this brazen & expensive refining capacity
ity, with that figure being a six-month high. The adventure to an informed national debate”. He
units were all taken offline entirely shortly there- noted: “Many experts prefer that this refinery is has been shut
after in anticipation of the rehabilitation work sold ‘as is’ by [the Bureau of Public Enterprises]
that is ongoing at Port Harcourt. to core-investors with proven capacity to repair in for nearly two
Some confusion was created when Alex it with their own funds.” years following
Okoh, the director-general of the Bureau of NNPC’s group managing director Mele Kyari
Public Enterprises (BPE), told Punch that he jumped to the defence of the initiative, disagree- failure to carry
thought NNPC’s refineries were partly opera- ing with suggestions that the existing refinery
tional. Earlier this month he said: “I think that could be scrapped and replaced with another for out appropriate
Warri would be around 5%, Port Harcourt the amount being paid for the revamp. He said
around 19/20%, and Kaduna is zero.” However, that building a new unit of similar class to the turnaround
NNPC’s statements relating to PHRC appear to existing Port Harcourt complex would cost the maintenance for
suggest it is out of service. government $7-12bn and take up to four years
In 2019, a $1.2bn project was planned across to complete. four decades
the four state refineries designed to restore out- He said that the “real cost” of the rehab work
put to at least 90% of nameplate capacity, with is $1.34bn. “Even then, you could argue and say
work originally anticipated being completed why you wouldn’t build a new refinery. We have
by 2023. However, the budget has grown by also seen some curious comparisons that Shell
$300mn and the scope has been confined to sold one of its refineries for $1.2bn and that it’s
PHRC. even better than our own.”
Meanwhile, Kyari also created some confu-
Revamped role sion by saying that the latest TAM at Port Har-
Meanwhile, with NNPC understood to be con- court was carried out in 2000 and the high cost
sidering offloading the majority of its stakes in of the new programme was caused by the previ-
the refineries, its role in the revamped refinery ous TAM around 19 years earlier being poorly
is yet to be defined. executed.
A condition of the Afreximbank loan that In spite of this, momentum appears to be
a “professional operations and maintenance building behind Nigerian downstream and the
company [be hired] to maintain the refinery” – 650,000 bpd Dangote refinery is expected to
unsurprising given the state oil firm’s poor track come into operation early next year. There too,
record. The company has since announced it will though, NNPC is intending to take a supporting
no longer operate the facility, nor its other refin- role, with reports suggesting it has returned to
eries at Kaduna and Warri. Afreximbank for another $2.5bn to buy a 20%
In May, NNPC launched a tender for a equity share in the facility. ™

Week 30 28•July•2021 www. NEWSBASE .com P5