Page 4 - DMEA Week 08 2021

DMEA COMMENTARY DMEA

NNPC agrees loan

to allow refinery

rehab work to begin

Nigeria’s state oil firm has finally secured funding
for its nationwide refinery rehabilitation project.

NIGERIA NIGERIAN National Petroleum Corp. (NNPC) larger of the two Port Harcourt refineries.
has agreed a deal for a loan to allow the company The deal was part of an 18 to 24-month,
to carry out rehabilitation work on the Port Har- $1.2bn project across the four state-run refiner-
WHAT: court refining complex. ies designed to restore output to at least 90% of
The loan with Speaking to S&P Global Platts on condition nameplate capacity, with work originally antici-
Afreximbank will cover of anonymity, the sources said that the work pated to be completed by 2023.
work to overhaul the was now set to begin at some point during Q1 With the coronavirus (COVID-19) pan-
210,000 bpd refining 2021. One source was quoted as saying: “Talks demic having slowed progress on agreeing the
complex at Port Harcourt. on securing the loan, which is about $1bn, actu- EPC deals, this target is unlikely to be met.
ally began late last year and I can tell you that
WHY: terms have now been agreed and [it] ready to be Pipelines
With all four state-owned disbursed.” NNPC subsequently invited investors to bid for
refineries currently One source told Platts said: “NNPC initially EPC contracts to repair pipelines and depots
closed ‘for maintenance’, was not favourably disposed to the terms pro- that serve the refineries at Kaduna and Warri as
NNPC is set to embark on posed by the lenders, but the terms have been well as Port Harcourt. The refineries, built in the
a long-awaited project to sorted out and agreement reached” on funding 1970s, are in need of extensive repairs and mod-
return refining capacity led by Cairo-based African Export-Import Bank ernisation. The company announced in Decem-
to 90% of its theoretical (Afreximbank). ber that it had received seven bids from local and
445,000 bpd nameplate. NNPC now intends to proceed with com- international companies for the repairs.
mercial bidding from pre-qualified engineering, The pipelines that feed the plants with oil are
WHAT NEXT: procurement and construction (EPC) compa- also in a state of disrepair, as a result of years of
Prior to the closure of nies for the overhaul job, with the pre-qualifica- what NNPC described as “incessant” oil theft
the refineries, the units tion process being overseen by NNPC subsidiary and vandalism.
were running at around Netco and KBR. Their refurbishment is to be carried out sep-
5%, and turnaround The Port Harcourt complex is comprised of arately to the work at the refineries.
maintenance (TAM) work two units, built roughly 25 years apart, with joint In mid-January, NNPC said that it had
has not been carried out total capacity of 210,000 barrels per day (bpd), received bids from 96 companies for the reha-
for around 44 years. With making it Nigeria’s largest refinery. bilitation work following a virtual public open-
so much ground to make In March 2019, Italy’s Maire Tecnimont was ing round for companies pre-qualifying for the
up, the ambitious project awarded a contract to for the work with the work.
is likely to take at least company explaining that the deal involved two The work is being offered in four lots: Lot 1
two years to complete. phases. covers infrastructure around Bonny and Port
The roughly $50mn first stage included a six- Harcourt, including a 210-km products pipe-
month ‘integrity check’ and equipment inspec- line; Lot 2, meanwhile, relates to facilities around
tion at the site, as well as ‘relevant engineering Escravos and Warri; Lot 3 is for infrastructure
and planning activities’. Fellow Italian firm Eni in Kaduna and Kano, including a 604-km oil
was contracted as technical adviser. pipeline from Warri to Kaduna, while Lot 4 is
Subject to completion of phase one, the Ital- for work in the Atlas Cove and Mosimi areas.
ian company was due to carry out the EPC con- The bidders will be required to fund the
tract on the required rehabilitation. repairs themselves and operate the pipelines for a
At the time, the second phase would be ful- period so that they can recoup their investments.
filled in collaboration with an unnamed ‘partner’, In that time, they will also receive oil transit fees.
which was later revealed to be Japan’s JGC, which Companies can bid for two of the lots but can
with Italy’s Saipem was the original builder of the only be selected for one.

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