Economy

Change? 14 Months After, FG Yet To Fix Refineries

Published

8 years ago

August 9, 2016

Fourteen months after the advent of the current administration, the three refineries belonging to the Nigerian National Petroleum Corporation, NNPC, are yet to be fixed, with the refineries producing an average of 47,553 barrels of crude oil per day (BPD) over the last one year.

This is a far cry from their combined installed capacity of 445,000 barrels of crude oil per day (BPD). Port Harcourt Refining Company, which is made up of two refineries, has a combined capacity of 210,000 barrels per day (BPD); while Kaduna Refining & Petrochemical Company Limited (KRPC) and Warri Refining & Petrochemical Company Limited (WRPC) have installed capacities of 110,000 BPD and 125,000 BPD respectively.

A document obtained from the NNPC, yesterday, revealed that the refineries are still undergoing repairs, rehabilitation and Turnaround Maintenance (TAM), a situation that ensured that local refining capacity remained below commercial threshold.

According to the document, the NNPC said refineries rehabilitation is on course to address the perennial shortage of fuel in the country, noting that this was in addition to co-locating of smaller refineries to leverage on the existing facilities and boost the nation’s refining capacity from 445,000 barrels per day to 650,000 barrels per day.

This is continuation of the trends witnessed in previous administrations, where the refineries were subjected to unending repairs and TAMs, with billions of dollars allocated on a yearly basis for such rehabilitations.

However, efforts to get the spokesperson of the NNPC, Mr. Muhammed Garba-Deen to comment on the never-ending repairs of the refineries and their current status proved abortive, as they refused to respond to text messages sent to their phones.

However, the NNPC, in its Financial and Operations Report for the Month of June 2016 released weekend, stated that about 75.26 per cent of the total Domestic Crude Oil supply for May 2016 was utilized via Direct-Sale-Direct-Purchase (DSDP). The DSDP was introduced by the NNPC to replace the crude oil for product exchange arrangement, also known as crude oil swap, and the Offshore Processing Agreement (OPA).

The NNPC allocates 445,000 barrels of crude oil daily to the refineries for local consumption, majority of which are processed outside the country, based on the arrangements in place at that point in time; while only an insignificant portion is processed by the refineries, based on their capacities at any point in time.

Also, the NNPC disclosed that total crude oil processed by the three refineries, KRPC, PHRC and WRPC, for the month of June 2016 was 225,770 metric tonne (MT) and equivalent of 1,655,345.99 barrels. This translates to an average production of 55,178 barrels daily.

Out of the total of 225,770 MT processed by the refineries in June, the NNPC stated that they produced 133,991 MT of finished Petroleum products, an equivalent of 982,422 BPD. This translates to an average daily output of 32,747 BPD of petroleum products.

The NNPC blamed the poor performance of the refineries on crude pipeline vandalism in the Niger Delta region coupled with on-going Refineries revamp; noting, however, that the three refineries continue to operate at minimal capacity.

The Minister of State for Petroleum Resources, Mr. Ibe Kachikwu, had on different occasions stated that the refineries returned to production, while at one point, he said the country needs about $700 million to upgrade and fix the refineries.

However, the recently appointed Group Managing Director of the NNPC, Mr. Maikanti Baru, had a few days ago, stated that the corporation would collaborate with the Spanish National Oil Company, REPSOL, to improve the technical capacities of the refineries.

Baru hinted that the NNPC might consider bringing in petroleum products to the country from REPSOL to help meet domestic demand of the product, while efforts are made to fix the refineries.

According to him, NNPC as an integrated Oil and Gas Company is currently undergoing transformation which includes increasing its refining capacity.

He said, “As you know, we have challenges with our refineries and with REPSOL refining about 900,000 barrels of crude oil per day, we can collaborate on that, going forward.

“While we are fixing our refineries, we also have the opportunity to bring in more petroleum products into the country to meet our domestic needs.”