Page 5 - DMEA Week 29 2021

DMEA COMMENTARY DMEA

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

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