Can NNPC really ramp refining capacity 662,000 bpd after repairs?

The Nigerian National Petroleum Corporation (NNPC) has said it is raising the country’s refining capacity from the current nameplate capacity of 445,000 barrels per day (bpd) to 662,000 bpd but this is a tall order considering previous efforts have yielded little result.

To achieve this plan, the corporation has enlisted the services of the original builders of the refinery who have started conducting studies to determine the cost of fixing the plants and returning them to 90 percent capacity utilisation by 2019, the corporation said in its quarterly publication.

The original builders of Nigeria’s four refineries are IGC Corporation of Japan for Port Harcourt Refinery, Italy based Snamprogetti for Warri Refinery and Japan based Chyoda, for Kaduna Refinery.

“Once the final costing is achieved, the Corporation would move swiftly to perfect the proposed funding option and execute the upgrade of the plants within 24 months window ahead of the 2019 deadline of the Federal Government for zero fuel import.”

Anibor Kragha, chief operating officer in charge of refineries and petrochemical autonomous business unit in an interview with the NNPC magazine said that they have managed to raise refining capacity from 8 million barrels a year, about five percent of refinery utilisation to 24 million barrels a year or 15 percent in 2017. The nameplate capacity of the refineries is 162.4 million barrels a year at 445,000 bpd.

“So, the government’s drive to exit importation of product requires additional or incremental refining capacity and that is where the Dangote refinery comes in because a lot has been made of the effort and we appeal to them to bring the refineries on stream as soon as possible and we expect that they should be on stream by 2019,” said Kragha.

However, this administration have only managed to raise refining capacity by a paltry 10 percent after 32 months of running it casting doubts about their capacity to ramp up refining capacity to 90 percent in just 24 months.

While the NNPC claims it has received bids from 30 financiers, analysts are doubtful the corporation’s plans are feasible. But the NNPC is not letting reason get in the way of its plans. Kragha said they already have two winning bids for their refinery co-location plan.

For Warri Refinery, Kragha said a group called LR is proposing bringing a-117,000 bpd refinery to the perimeters of existing plants, while for Port Harcourt, a group called the J-Lambert Group is proposing bringing 100,000 bpd refinery and co-locating them to the existing refinery.

Co-location is acquiring brown field refineries in other places, decoupling them and assembling them near an existing plant to run as a unit again.

“Right now, we have actually signed agreements with those two companies for the two locations, primarily based on land and utility at this time and then they have to go through and do their environmental impact assessment to bring in the refineries and then we progress from that point,” explained Kragha.

There is however scant details about these companies and their dealing with the NNPC or their activities generally.

Some industry experts have often counselled that the refineries should be privatised on account of NNPC’s management which seems like managing to extinction. This is why the refineries have become a source of national embarrassment.

Yet some say the state should not relinquish ownership but should have efficient managers. Wumi Iledare, director, Emerald Energy Institute, University of Port Harcourt told BusinessDay that Nigeria should not sell the refineries, rather it should insist it is managed professionally like Norway’s Statoil.

ISAAC ANYAOGU