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Oil and gas experts at the West African International Petroleum Exhibition and Conference in Lagos, last week proffer solutions to poor performance of refineries in Nigeria

|  By Anayo Ezugwu  |  Mar 13, 2017 @ 01:00 GMT  |

THE Nigerian National Petroleum Corporation, NNPC, has attributed the poor performance of refineries in the country to obsolete technology and management inefficiency. The corporation said the refineries are in bad shape and will need turnaround maintenance to perform at full capacity.

At a panel session at the West African International Petroleum Exhibition and Conference, WAIPEC, in Lagos on Wednesday, February 22, Siky Aliyu, managing director, National Engineering and Technical Company, NETCO, a subsidiary of NNPC, said the refineries are currently struggling to achieve only 50 percent, which is far below the 93 percent that had attracted queries in the past. He stated that when he started his NNPC career in the refineries over 30 years ago, the then group managing director of the corporation used to query the refineries for performing at 93 percent capacity utilisation.

“We are grossly inefficient in managing the refineries. We have been struggling to do 50 percent. I started my career in the refineries and when we are doing 93, 95, 96 percent, I remembered the GMD calling us to ask what is happening? What is really going on? Why are you doing 93 percent? And you see people running helter – skelter. Now, we are doing 12 percent, 15 percent.”

Aliyu stated that Nigeria accounts for 73 percent of the 609,000 barrels per day West Africa’s refining capacity, without much to show for it as a result of the poor performance of the country’s four refineries. According to him, Nigeria with her huge population has only four refineries while Egypt has nine refineries and United States has 137 operating refineries. “I agree with my sister (Mrs. Uju Ifejika) that the four refineries are technically obsolete. We are planning to build pipelines between Niger and Kaduna. We can’t have a refinery in Kaduna where we pay workers but can’t put the refinery into use,” he added.

He noted that the only means of survival of the refineries at this current regime of low oil price is to encourage collaboration with the international oil companies. He said Nigerian oil and gas industry has been fortunate to have had previous and current regimes that have recognised and promoted the establishment of institutions, enacted laws, identified key areas that can stimulate economic growth and provided the necessary support to businesses and companies that are willing to impact positively on the economy.

“The collaborative success story of the DED of Egina FPSO project, which represents only a maximum of 10 percent value chain of the FPSO, has indeed repositioned the Nigerian Engineering companies. Rather than being the traditional competitors, they are now partners in progress and they are expanding their synergetic arrangements in readiness to take up other projects of this magnitude.

“Examples of such upcoming projects are; SNEPCO’s Bonga South-West FPSO projects, NAE’s Zabazaba FPSO project, ExxonMobil’s Bosi FPSO Project, NLNG Train 7 and/or NLNG Debottlenecking Project, etc. If so much can be said to have been achieved with DED which represents just about 10 percent of a typical FPSO project, one can only imagine what other opportunities exist in the remaining 90 percent of the project value chains in the procurement and construction scope of work for such projects which are characterized by high requirements for expertise, finance and other capacity requirements,” Aliyu said.

Another panellist, Uju Ifejika, chairman/chief executive officer, Brittania-U, said she was worried that the NNPC is not interested in maximising the full potentials of the country’s refineries. She said the corporation is only interested in four out of the 15 derivatives from the refineries.

Equally, she advocated that the Department of Petroleum Resources, DPR, should stop giving out licenses for people to build refineries, rather compel those already with the licenses to start work. According to Ifejika, it’s only Dangote among hundreds with the licenses that is interested in building a refinery in the country.

On her part, Seyi Afolabi, executive director/general manager, business development upstream Nigeria commercial, Mobil producing Nigeria limited, said the issue of collaboration is something the operators should be serious about in order to encourage partnership in a challenging environment. She said it was imperative that local companies rendering services in the country should come together to position themselves to effectively compete with international companies who currently have a competitive advantage in this current low price regime.

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