Nigerian Refineries Gulp N162bn in Eight Months

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Maikanti Kacalla Baru

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The Nigerian National Petroleum Corporation says refineries in the country gulped crude oil worth N162 billion in eight months

By Anayo Ezugwu  |  Dec 12, 2016 @ 01:00 GMT  |

THE latest financial and operations report of the Nigerian National Petroleum Corporation, NNPC, has shown that three of the four refineries in Nigeria have continued to receive high volumes of crude oil valued at billions of naira every month since the beginning of this year, despite their abysmal performance either individually or collectively. An analysis of the refineries performance in September 2016 as released by the NNPC on its website showed that although the three facilities got no crude delivery in the fourth quarter of 2015, they started receiving high quantity of crude oil in January 2016.

The refineries are the Kaduna Refining and Petrochemical Company in Kaduna State; Port Harcourt Refining Company in Rivers State; and Warri Refining and Petrochemical Company in Delta State. The latest financial and operations report showed that between January and August, the country’s refineries received a total crude volume of 16.468 million barrels valued at N162.6 billion.

Despite receiving such huge volumes of crude during the period, the facilities still performed below standard as the corporation admitted that the refineries’ combined performance was abysmal. The largest crude delivery in volumes to the refineries during the eight-month review period was done in August 2016, as the facilities got 3.282 million barrels of crude oil valued at N48.901 billion.

On the other hand, the lowest crude delivery to the facilities was done in January 2016, as the combined crude oil receipt for that month was 502,450 barrels worth N2.726 billion. In one of its comments on the performance of the refineries, the NNPC said, “For the month of September 2016, the three refineries produced 139,724 metric tonnes of finished petroleum products and 74,885MT of intermediate products out of 252,897MT of crude processed at a combined capacity utilisation of 13.89, compared to19.09 percent combined capacity utilisation achieved in the month of August 2016. The abysmal performance was due to crude pipeline vandalism in the Niger Delta region and the three refineries continue to operate at minimally.

There have been calls on several occasions for the privatisation, concession or outright sale of the Nigeria’s refineries.

Recently, Ibe Kachikwu, minister of state for petroleum resources, raised the alarm that the refineries could end up as scrap in 2019 once Aliko Dangote began processing crude oil at his refinery in Lagos. Kachikwu, who spoke at the stakeholders’ consultative forum in Abuja, said, “Refineries will have to work; it is really not an option anymore. And not only should it work, it has to work very quickly.

The reality is that if we do not privatise and we do not support concession, which is not what we are doing, then we have a responsibility to find private capital to get them to where they should be. “This is because if we do not get them to work, in 2019, I can assure you that if Dangote system works well, we would have scrap; we won’t have refineries because by then, it would be too late to do anything.”

The government in its road map for the oil and gas sector tagged Seven Big Wins unveiled recently by President Muhammadu Buhari, stated that it would spend between $1.4 billion and $1.8 billion to rehabilitate the country’s refineries within two years in a bid to reposition the industry.

It stated that the rehabilitation would be carried out with the participation of the private sector as the road map represented the short and medium-term priorities to grow the Nigeria’s oil and gas industry from 2015 to 2019.

Part of the implementation strategy of the road map is for the government to ensure integrity assessment of all existing refineries and formulate investment plans to refurbish the facilities and improve their capacities. The government, in the report, said the short-term objective within two years would be the execution of a comprehensive rehabilitation programme under private sector participation to improve operations and increase capacity utilisation.

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