Page 6 - AfrOil Week 08 2021

AfrOil COMMENTARY AfrOil

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

NIGERIAN National Petroleum Corp. (NNPC) pandemic having slowed progress on agreeing
has reportedly agreed on a deal for a loan to the EPC deals, this target is unlikely to be met.
WHAT: allow the company to carry out rehabilitation
The loan with Afrex- work on the Port Harcourt refining complex. Pipelines
imbank will cover work to Speaking to S&P Global Platts on condition NNPC subsequently invited investors to bid for
overhaul the 210,000 bpd of anonymity, sources said that the work was EPC contracts to repair pipelines and depots
refining complex at Port now set to begin at some point during Q1-2021. that serve the refineries at Kaduna and Warri as
Harcourt. One source was quoted as saying: “Talks on well as Port Harcourt. The refineries, built in the
securing the loan, which is about $1bn, actu- 1970s, are in need of extensive repairs and mod-
WHY: ally began late last year and I can tell you that ernisation. The company announced in Decem-
With all four state-owned terms have now been agreed and [it] ready to ber that it had received seven bids from local and
plants currently closed be disbursed.” international companies for the repairs.
“for maintenance,” NNPC
is set to embark on a One source told Platts: “NNPC initially was The pipelines that feed the plants with oil are
long-awaited project to not favourably disposed to the terms proposed also in a state of disrepair, as a result of years of
return refining capacity by the lenders, but the terms have been sorted what NNPC described as “incessant” oil theft
to 90% of its theoretical out and agreement reached” on funding led and vandalism. Their refurbishment is to be car-
445,000 bpd nameplate. by Cairo-based African Export-Import Bank ried out separately to the work at the refineries.
(Afreximbank). In mid-January, NNPC said that it had
WHAT NEXT: NNPC now intends to proceed with com- received bids from 96 companies for the reha-
Prior to the closure of the mercial bidding from pre-qualified engineering, bilitation work following a virtual public open-
refineries, the units were procurement and construction (EPC) compa- ing round for companies pre-qualifying for the
running at around 5%, nies for the overhaul job, with the pre-qual- work.
and turnaround main- ification process being overseen by NNPC The work is being offered in four lots: Lot
tenance (TAM) work has subsidiary Netco and KBR. 1 covers infrastructure around Bonny and
not been carried out for The Port Harcourt complex is comprised of Port Harcourt, including a 210-km products
around 44 years. With so
much ground to make up, two units, built roughly 25 years apart, with joint pipeline; Lot 2, meanwhile, relates to facilities
the ambitious project is total capacity of 210,000 barrels per day (bpd), around Escravos and Warri; Lot 3 is for infra-
likely to take at least two making it Nigeria’s largest refinery. structure in Kaduna and Kano, including a 604-
years to complete. In March 2019, Italy’s Maire Tecnimont was km oil pipeline from Warri to Kaduna, while Lot
awarded a contract to for the work with the 4 is for work in the Atlas Cove and Mosimi areas.
company explaining that the deal involved two The bidders will be required to fund the
phases. The roughly $50mn first stage included repairs themselves and operate the pipelines for
a six-month “integrity check” and equipment a period so that they can recoup their invest-
inspection at the site, as well as “relevant engi- ments. In that time, they will also receive oil
neering and planning activities.” Another Ital- transit fees. Companies can bid for two of the
ian company, Eni, was contracted as technical lots but can only be selected for one.
adviser.
Subject to completion of phase one, the Ital- Suspended operations
ian company was due to carry out the EPC con- The launch of bidding for work on downstream
tract on the required rehabilitation. At the time, infrastructure followed the revelation in April by
the second phase would be fulfilled in collabo- the head of NNPC, Mele Kyari, that the company
ration with an unnamed “partner,” which was had suspended operations all four refineries so
later revealed to be Japan’s JGC, which with Ita- that it could seek funding for the refurbishment
ly’s Saipem was the original builder of the larger of the associated refineries. Mele Kyari added
of the two Port Harcourt refineries. that it would not continue to act as operator of
The deal was part of an 18 to 24-month, the facilities once they resume operations.
$1.2bn project across the four state-run refiner- The NNPC’s four facilities have a combined
ies designed to restore output to at least 90% of nameplate capacity of 445,000 bpd, with the
nameplate capacity, with work originally antici- Kaduna and Warri facilities having a theoretical
pated to be completed by 2023. throughput capacity of 110,000 bpd and 125,000
With the coronavirus (COVID-19) bpd respectively.

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