Amid mounting concerns over the operational inefficiencies of Nigeria’s state-owned refineries, the Federal Government is considering selling the Port Harcourt, Warri, and Kaduna refineries as part of a broader overhaul strategy.
The Nigerian National Petroleum Company Limited (NNPCL) revealed that the refineries, which have consumed approximately $18 billion in turnaround maintenance over the years, may be privatized following an ongoing review.
Refineries Under Scrutiny After Failed Revamp Efforts
The Group Chief Executive Officer of NNPCL, Bayo Ojulari, disclosed the potential sale during an interview with Bloomberg on the sidelines of the OPEC International Seminar in Vienna, Austria.
Ojulari admitted that despite significant investments and the introduction of new technologies, the refineries—particularly the aging Port Harcourt facility—have proven difficult to rehabilitate.
“So, refineries, we made quite a lot of investment over the last several years and brought in a lot of technologies. We’ve been challenged, he said.
“When you’re refining a very old refinery that has been abandoned for some time, what we’re finding is that it’s becoming a little bit more complicated.”
“Sale Not Out of the Question” – NNPCL CEO
Ojulari stated that the company is reassessing its refinery strategy, with a final decision expected before the end of 2024.
“So, we’re reviewing all our refinery strategies now. We hope that before the end of the year, we will be able to conclude that review. That review may lead to us doing things slightly differently.”
When asked about privatization, he added: “What we’re saying is that sale is not out of the question. All the options are on the table, to be frank. But that decision will be based on the outcome of the reviews we’re doing now.”
High Production Costs, Security Challenges Add to Woes
The NNPCL boss also highlighted Nigeria’s high oil production costs, currently between $20 and $30 per barrel, partly due to security investments in pipeline protection.
“Part of that is because of the investment we’ve had to make in terms of security of pipelines, which, as you know today, we have 100 per cent availability of our pipelines. That came out of the significant investment.”
Discussion about this post