Page 4 - DMEA Week 06 2023

DMEA COMMENTARY DMEA

NNPC makes downstream

progress as wait for

Dangote continues

The Nigerian firm is making progress on two of its dormant oil refineries

as the country awaits the launch of the world-scale Dangote unit

NIGERIA AFTER several years without processing crude, Daewoo Engineering & Construction Co.
Nigeria’s NNPC Ltd (NNPCL) said this week awarded a $741mn deal to rehabilitate the asset
that the first of its four refineries is expected to in early February. NNPCL said that a mainte-
WHAT: NNPC is come back on stream during Q2. News about the nance service contract had been agreed, pro-
preparing to re-launch part anticipated re-launch of one of Port Harcourt’s viding for Daewoo to restore production at the
of its Port Harcourt refinery two refining units comes as a contract has been defunct 110,000-bpd facility to at least 60% of its
complex following a lengthy awarded for the rehabilitation of the company’s previous capacity by the end of 2024.
rehabilitation process. Kaduna facility. The NNPCL aims to finance Daewoo’s work
at Kaduna through a mixture of third-party
WHY: The repair of Port Harcourt progress financing and its own revenue, though no lend-
four state-owned refineries A statement from NNPC Ltd said that the old ers have yet been revealed.
is long overdue and Port refinery at the Port Harcourt Refining Complex Confusingly, in August 2021 contracts were
Harcourt will be the first to (PHRC) would resume operations during Q2, awarded to Italy’s Saipem and subsidiary Saipem
resume operations. noting that the project is 64% complete. Contracting worth a total of $1.485bn – $587mn
PHRC comprises a 60,000 barrel per day for Kaduna and $898mn for NNPCL’s other
WHAT NEXT: unit built in 1965, known as Area 5, and a newer refinery at Warri – that entail a three-phase
A contract has also been unit built in 1989 capable of processing 150,000 approach to rehabilitating the refineries over 77
let for the Kaduna refinery, bpd of crude. It has been offline since 2019 amid months.
as NNPC appears to be reports that no comprehensive turnaround Upon the commissioning of Port Harcourt
making real progress on its maintenance (TAM) had been carried out for as and Kaduna, as well as another refinery in Warri,
downstream overhaul. long as 40 years. the NNPCL said it would run the facilities using
Italy’s Maire Tecnimont (MT) was awarded ‘outside contractors’. This was one of the condi-
a $1.5bn contract by the Nigerian government tions of the aforementioned Afreximbank loan
in 2021, thanks to a $1bn loan being secured – taking into account the company’s miserable
from Cairo-based African Export-Import Bank recent track record in refining.
(Afreximbank) that same year. The contract saw NNPCL CEO Mele Kyari said in an Abuja
MT covering the engineering, procurement and briefing in August 2022 that “[NNPCL] plans
construction (EPC) work to revive Port Har- to take back control of the refineries, run them
court as part of Nigeria’s plan to revitalise its as a business, and repay the loans obtained
downstream sector through re-commissioning for their rehabilitation through the refineries’
of its old refineries. productivity”.
The original plan was to achieve 90% of its
nameplate capacity by 2023, with the second and Minority shareholdings
third phases six and 26 months later. MT, with The company acquired a 20% stake in the
compatriot supermajor Eni as technical advisor, 650,000-bpd Dangote refinery complex being
had carried out a $50mn, six-month ‘integrity built outside Lagos, which after years of delays
check’ including equipment inspection and and cost overruns is expected to enter produc-
‘relevant engineering and planning activities’ in tion this year.
2019. Meanwhile, NNPCL has also assumed a
NNPCL has previously said that work on minority shareholding in the modular refineries,
Area 5 would be complete during early 2023, that at present are the only operational refining
with Minister of Petroleum Resources Timipre assets in the country. Sylva said last week: “We
Sylva saying in January that it would be finished have issued licences to prospective investors for
in Q1. the establishment of refineries, some private
operators established modular refineries like
Kaduna contract Waltersmith, Azikel, Anoh [gas plant], Duport
Meanwhile, progress is also anticipated at the Midstream, while existing refineries are being
smaller Kaduna refinery, with South Korea’s rehabilitated.”™

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