The reactivation of the Port Harcourt refinery on Tuesday marks a major turning level for Nigeria’s downstream oil sector, after years of stalled makes an attempt. With its return, the refinery is about to rival the already operational Dangote refinery in contributing to Nigeria’s purpose of turning into a petrol-exporting nation, writes LAOLU AFOLABI
In an unprecedented announcement, the Nigerian Nationwide Petroleum Firm Restricted introduced on Tuesday morning that the beforehand moribund Port Harcourt Refinery was now operational and would start each day product loading for entrepreneurs.
NNPCL confirmed that the beforehand idle refinery, positioned within the Alesa Eleme refinery advanced, about 25 kilometres east of Port Harcourt, had been efficiently revitalised and was loading petroleum merchandise for distribution to entrepreneurs.
The announcement of a major milestone in Nigeria’s efforts to boost home refining capability caught many unawares. Earlier than the Tuesday rollout day, there had been a sorry state of failure within the supply of the refinery. After its missed manufacturing rollout deadline for the seventh time in September, the oil big tactically withdrew from promising any new date.
Maire Tecnimont SpA, the contractor overseeing the refinery’s rehabilitation, said that it couldn’t disclose particulars of the rehabilitation course of, together with the proposed completion date of the venture.
The corporate’s Chief Company Communications Officer, Femi Soneye, introduced in a terse message on his X.com deal with, “Port Harcourt Refinery Begins Manufacturing; Truck Loading Begins In the present day, Tuesday!”
In one other assertion, he mentioned, “The Nigerian Nationwide Petroleum Firm (NNPC) Ltd has fulfilled its pledge of re-streaming the Port Harcourt Refining Firm (PHRC), signalling the graduation of crude oil processing from the plant and supply of petroleum merchandise into the market.”
On Tuesday, vans started loading petroleum merchandise, together with Premium Motor Spirit (petrol), Automotive Gasoline Oil (diesel) and Family Kerosene (kerosene), whereas different product slates had been additionally scheduled for dispatch.
For the rehabilitated Port Harcourt refinery, it was a protracted, tough street to its rehabilitation and gas manufacturing after years of failed and unfulfilled guarantees by the federal government.
The refinery has two wings – the previous refinery, constructed and put to make use of in 1965 with a refining capability of 60,000 barrels of oil per day, and the brand new plant producing 150,000bpd, each summing as much as 210,000bpd. The oil refinery got here on stream on Tuesday and about 200 vans loaded on the gantry.
In a press release by the Particular Adviser to the President (Media and Public Communications), Sunday Dare, “The Port Harcourt Refinery has two wings. The previous refinery comes on stream at present with an put in manufacturing capability of 60,000 barrels per day of crude oil. About 200 vans are anticipated to load merchandise each day from the refinery Renewing the Hopes of Nigeria.”
The NNPC mentioned it had fulfilled its pledge of re-streaming the Port Harcourt refinery, signalling the graduation of crude oil processing from the plant and supply of petroleum merchandise into the market.
Talking throughout a quick ceremony to mark the graduation of product loading on the refinery in Port Harcourt, the Group CEO, Mele Kyari, described the graduation of the loadout actions as a monumental achievement for Nigeria.
He thanked President Bola Tinubu for his unwavering help and understanding in the direction of the rehabilitation venture and for his persistence in making certain vitality safety for the nation.
Kyari additionally expressed deep appreciation to the NNPC board of administrators and the complete workers for his or her help and dedication, which crystallised into the streaming of the refinery. He additionally counseled the contractors for his or her wonderful work in making certain the refinery’s supply regardless of quite a few challenges.
The GCEO additional thanked Nigerians for his or her endurance and for the authentic expectations of the corporate to ship on the opposite refineries.
In his remarks, the CEO, Nigerian Midstream and Downstream Petroleum Regulatory Authority, Farouk Ahmed, assured the corporate of his company’s continued help in finishing the rehabilitation work at different refineries.
Tinubu, in a message by the Particular Adviser to the President on Info and Technique, Bayo Onanuga, prolonged his heartfelt congratulations to NNPCL on the profitable revitalisation of the Port Harcourt refinery.
The President acknowledged the pivotal position of former President Muhammadu Buhari in initiating the great rehabilitation of all of the refineries and expressed gratitude to the African Export-Import Financial institution for its confidence in financing the vital venture.
With the profitable revival of the Port Harcourt refinery, Tinubu urged NNPCL to expedite the scheduled reactivation of each the second Port Harcourt refinery, in addition to the Warri and Kaduna refineries.
Highlighting the values of endurance, integrity, and accountability within the rebuilding of the nation’s infrastructure, Tinubu known as upon people, establishments, and residents entrusted with duties to take care of focus and uphold belief of their service to the nation.
Lengthy, robust street to rehabilitation
The 4 state-owned refineries within the nation positioned in Port Harcourt, Kaduna and Warri stopped operations in 2019, forcing the Federal Authorities into overseas refining of its crude oil, which grossly affected the gas provide and financial stability of the nation.
The Port Harcourt refinery was final totally operational over a decade in the past, with its efficiency declining considerably within the years main as much as its eventual shutdown in 2019. Earlier than that point, the refinery operated beneath capability, producing little to no refined merchandise. The power’s inefficiencies and lack of upkeep led to its full closure for the rehabilitation venture initiated in 2021.
Talking on why it shut down the 4 refineries, Kyari, in a TV interview, mentioned they had been functioning beneath capability.
“All of the 4 refineries in three areas are shut down and it was a deliberate determination for 2 causes. One is that the supply of crude oil to those refineries is totally challenged as a result of the pipeline community has been utterly compromised by vandals and all types of people that won’t enable us to function these pipelines,” he said.
“Meaning you aren’t capable of ship crude oil to those refineries successfully to their most capability. Secondly, what you name rehabilitation is completely different from turnaround upkeep. Turnaround is routine which each and every refinery does however if you speak about rehabilitation, it’s that colossal lack of capability within the refinery and it means you haven’t performed the turnaround upkeep correctly.
“Usually, each refinery is predicted to function at 90 per cent of its put in capability. With the perfect of effort, with all of the turnaround upkeep that has taken place, it’s not possible to run any of the refineries earlier than the shutdown at that stage.
“Our estimate was to run it at 60 per cent of capability however when you try this, all you’re doing is worth destruction. You’ll take $100 crude into the refinery and produce out $70 product. It doesn’t make sense.”
His assertion additional confirmed the assertions by former Nigerian leaders that the refineries wouldn’t work, blaming corruption and poor administration.
Former President Olusegun Obasanjo, whereas addressing some Home of Representatives members who visited him, recalled how Shell refused his pleas to assist run the refineries when he invited them throughout his days as President.
In response to Obasanjo, some Nigerians later paid $750m to take over the refineries, however his successor Umaru Yar’Adua turned it again.
“I ran to him (Yar’Adua), I mentioned, ‘You recognize this isn’t proper’. He mentioned, ‘Properly, the NNPC mentioned they’ll do it’. I mentioned ‘NNPC can’t do it’. I informed my successor that ‘the refineries, from what I heard and know, won’t work and if you need to promote them, you’ll not get anyone to purchase them at $200m as scrap’. And that’s the scenario we’re in.
“So, why will we do this sort of factor to ourselves? NNPC knew that they might not do it, however they knew they might eat and stick with it with the corruption that was occurring in NNPC. When individuals had been there to do it, they put stress. In a civilised society, these individuals must be in jail,” Obasanjo posited.
Additionally, whereas reacting to the plan at hand the refinery over to personal managers, former Vice President Atiku Abubakar tackled former President Buhari and the incumbent Tinubu for failing to heed his recommendation that the refinery and others owned by the federal government must be bought to personal people.
The Senate additionally lately raised questions over the $1.5bn accredited in 2021 for the renovation of the refinery. The Higher Chamber lamented that it was “unfair and unsuitable to deal with authorities companies or public firms as an orphan whereas non-public companies had been flourishing and thriving.”
The Senate Chief and Chairman of the Senate advert hoc Committee to research the alleged financial sabotage within the Nigerian Petroleum Business, Opeyemi Bamidele, raised the questions at a session with stakeholders within the trade in Abuja.
The rehabilitation of the Port Harcourt Refinery, Nigeria’s largest refining advanced, marks a major milestone within the nation’s quest for vitality self-sufficiency.
In 2015 when he got here on board, former President Buhari declared that the nation would now not import petroleum merchandise by 2019 and that the Port Harcourt Refinery was key to reaching the objective. Nevertheless, by 2017, two years away from the deliberate deadline, the rehabilitation efforts stalled as a result of funding challenges.
Having did not fulfil the promise, Buhari, on his return to energy in 2019, admitted failure to satisfy the deadline and set a brand new deadline for 2020. Nevertheless, COVID-19 and challenges with the contracting course of and funding as soon as once more derailed the venture.
In 2021, the Buhari authorities made one other try, approving $1.5bn (roughly N567bn, contemplating the alternate price on the time) for the refinery with a brand new completion date set for 2023. The contract was awarded to the Italian agency, Maire Tecnimont SpA, structured throughout three phases with timelines of 18, 24, and 44 months. The primary section of operation was scheduled to start in 2022 and completion in 2023. The dream remained a mirage till the previous President ended his tenure.
Tinubu renewed his curiosity within the refurbishing of the refinery, having promised to construct on the works of his predecessor. There was additionally stress on him after his off-the-mark “Subsidy is gone” inaugural speech to make sure the refineries grew to become operational, in order to scale back the worth of petroleum merchandise throughout the nation.
After a gathering with the organised Labour and different stakeholders, the federal government assured them that the refinery would come on stream by December 2023. By the deadline, the NNPC introduced that it had accomplished the mechanical rehabilitation of the refinery. With the primary section accomplished, reaching mechanical readiness for a part of the refinery’s operations, a take a look at run commenced in early 2024, resulting in the refinery’s gradual restart with an preliminary processing capability of 60,000 barrels per day.
Nevertheless, the NNPCL continued to shift deadlines of product rollout, citing the necessity for additional testing and calibration of kit.
Kyari, introduced earlier in 2024 that the refinery obtained 450,000 barrels of crude oil and would start operations in April.
Whereas showing earlier than the Senate in July, Kyari boasted, “I can affirm to you, Mr Chairman, that by the tip of the 12 months, this nation can be a web exporter of petroleum merchandise.
“Particular to NNPC refineries, we’ve got spoken to quite a few your committees, and it’s not possible to have the Kaduna refinery come into operation earlier than December, it’ll get to December, each Warri and Kaduna, however that of Port Harcourt will begin manufacturing early August this 12 months.”
When the August deadline failed, the oil big set a brand new deadline of September and failed once more.
Ultimately, on Tuesday the much-anticipated Port Harcourt refinery got here on stream as about 200 vans offloaded petrol at its gantry.
New aggressive chapter
Earlier than the approaching on-stream of Port Harcourt refinery, Dangote refinery had change into totally operational within the nation. The refinery, positioned within the Lekki axis of Lagos State, additionally suffered some delays to its full manufacturing.
On Tuesday, September 3, the refinery lastly commenced the rollout of its first Premium Motor Spirit (petrol) from its 650,000 barrels per day facility, after an announcement by the excited President of Dangote Group, Aliko Dangote, throughout a press convention with journalists.
Nevertheless, after scaling the technical hurdles, the refinery continues to be struggling to outlive Nigeria’s panorama. It has confronted many obstacles and market hostilities. On the inaugural loading day, Dangote had boasted of the standard of the refinery product.
The response was for the Nigerian Midstream and Downstream Petroleum Regulatory Authority, which had earlier claimed that the refinery was producing merchandise of low high quality.
Dangote, reacting to the allegations, mentioned the refinery’s merchandise not solely complied with set requirements however had additionally surpassed these of its contemporaries, with a components per million measurement now at 32. The enterprise mogul mentioned the refinery was initially producing round 665ppm of product, which was thought of the highest quality on the time. He then fired a shot on the NMDPRA, accusing the company of permitting importation of soiled gas into the nation.
Debunking Dangote’s declare, the Govt Director of Distribution Programs, Storage and Retailing Infrastructure at NMDPRA, Ogbugo Ukoha, mentioned there was no soiled gas being imported into the nation, including that its mandate was to make sure that solely high quality petroleum merchandise had been provided and consumed in Nigeria.
After the standard subject was laid to relaxation, the controversy over the naira for crude sale reared its head. The Federal Authorities, in July, mentioned it will promote crude priced in naira to native refineries for an preliminary six months, beginning in October, with Dangote as the principle beneficiary.
Nigeria formally commenced the sale of crude oil to refineries in naira on October 1, forcing the Dangote refinery to concentrate on native provide. The refinery obtained 4 cargoes of crude oil from the NNPC underneath the naira-for-crude sale settlement, however the refinery had been compelled to look to america for crude.
Vice President of Dangote Industries Restricted, Edwin Devakumar, on Friday, November 22 mentioned the refinery and different native refiners had been unable to safe sufficient crude oil provides regardless of the Federal Authorities’s plan to promote crude priced within the native forex.
“We want 650,000 barrels per day, (NNPCL) agreed to provide a minimal of 385,000bpd however they don’t seem to be even delivering that,” Devakumar informed Reuters.
One other subject is the sale of merchandise to entrepreneurs and pricing. At inception, the NNPC organized itself because the off-taker of Dangote petrol. It introduced a pricing template which elevated the worth of petrol to ultimate customers. Nigerians, who had anticipated a diminished price of petrol, had been disenchanted as they needed to pay extra for the product. The association later modified as main entrepreneurs had been allowed to raise merchandise from the Dangote refinery. The Lagos-based refinery additionally lately signed a pact with different entrepreneurs to produce merchandise on to them.
Nevertheless, with the rollout of merchandise on the NNPCL Port Harcourt Refinery on Tuesday, competitors available in the market has intensified. The 2 most important working refineries within the nation – the Port Harcourt Refinery and Dangote refinery, which started petrol rollouts on September 3 – will now compete in pricing methods, product availability and crude oil sourcing.
Talking on the loading arm of the Port Harcourt Refinery on Tuesday, the CEO of NMDPRA, Ahmed, mentioned, “What’s essential is that there isn’t any competitors and there’s a selection, and we’ll see the costs of the merchandise come down. With the Port Harcourt Refinery approaching board, we’ll go from web importer of PMS to web exporter.”
In his contribution, a Professor of Petroleum Economics and Coverage Analysis and the Director, Power Info Division of the Centre for Power Research, College of Ibadan, Wumi Iledare, mentioned, “Properly, to begin with, I need to congratulate NNPC for bringing the Port Harcourt refinery into existence. The refinery capability is about 11.1 per cent of the full provide of NNPC refineries within the nation, in order that’s the constructive information.
“That’s going to a minimum of put much less stress on the overseas alternate. I feel they received’t need to import, and NNPC received’t need to help any import. That’s the equal of what 60,000 barrels can produce.
“It’s going to be complementary to Dangote refinery. So, congratulations to NNPC for bringing these 60,000 barrels into the market they usually don’t need to export any of their merchandise.”
Talking on the potential rivalry between NNPCL and Dangote refinery, Iledare mentioned, “They (NNPC and Dangote) are extra like opponents. That’s a greater phrase to make use of if you end up trying on the downstream market. They aren’t rivals, however they’re growing the market, particularly within the refinery sector.
“This welcome improvement may even put Dangote able to not be a monopoly as a result of Dangote continues to be going to be a dominant agency that may affect the product market due to its giant dimension.
“You’ve gotten Dangote, which is 650,000bpd, then you may have different refineries which might be about 50,000bpd, in order that’s 700,000 after which plus this 60,000, that’s about 760,000bpd.
“So, Dangote continues to be a dominant agency and except the petrol authority stands within the hole, it may possibly simply affect the pricing of the petrol merchandise due to its dimension. The regulator should make it possible for no person is dictating the worth of petroleum merchandise.”
A former lawmaker, Shehu Sani, in his X.com publish, mentioned “Glad to listen to that Port Harcourt Refinery has commenced manufacturing. We hope it will impression on decreasing the worth of petroleum merchandise and make life simpler for the lots. We’re anxiously ready for the same gesture to Kaduna Refinery. A rustic that can’t course of its pure assets continues to be a colony. Kudos to Kyari.”