The Needless Noise over Rehabilitating Port Harcourt Refinery

By Kasim Baba KAsim on April 1, 2021

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Recently, many ordinary Nigerians who had received, with boundless excitement, government’s recent approval of $1.5 billion to rehabilitatethe Port Harcourt after over twenty years of dormancy weredisappointed by the criticisms of a few interests rooting for the outrightsale of the highly-prized national asset which has a total installed capacity of 210, 000 barrel per day that can produce 10.4 million litersof Premium Motor Spirit (PMS).

The nation’s other refineries in Warri and Kaduna with a combinedcapacity of 445,000b/d which had also suffered serial neglect due todelayed Turn-Around Maintenance and performance decline had beensince shut down.

The Kaduna Petrochemical Company Limited (KRPC) has 110, 000 bpdcapacity while Warri Refining Petrochemical Company Limited (WRPC) has 125, 000 bpd capacity. It is indeed a sad spectacle which thepresent government is trying to reverse. Therefore, the noise over rehabilitating the Port Harcourt refinery is completely needless and diversionary.

It had been alleged that some interests had long conspired with government officials to kill the refineries as a means of convincing government to put them up sale after ripping government of hugeprofits under fraudulent regimes of fuel subsidy since the dormant refineries were certified unable to meet the local demand for petrol reminiscent of memories of imported toxic petrol that killed andmaimed innocent Nigerians.

It is becoming clearer to many Nigerians that the criticisms against the rehabilitation plan are sufficient evidence that these interests are readyto strike again at the least opportunity. But industry watchers havewidely applauded the rehabilitation plan.

According to them, it will create boundless benefits to Nigerians such asmeeting local energy demand, growing the nation’s GDP, strengthening the naira by reducing the demand for forex to creating thousands of jobs across the entire value chain (crude supply, operating and maintaining the refinery, product supply, etc) including several third-party contractors that will supply outsourced services or goods, theadvantages are huge.

Also, locally refined petroleum products will serve as feed stock for small scale local manufacturing but most important is the significantand visible benefit such rehabilitation means to the national energy security of all Nigerians past maintenance had consumed billions of dollars without real-time visible benefits to the nation.

It is not surprising therefore to hear such critics call for outright sale of the refineries citing the sale of Shell Martinez refinery in the U.S as acase study when, in fact, they do not realize that the 105 year-old refinery was traded off as part of crude oil supply and product off-take agreements between Shell and the buyers apart from the environmental challenges with the Californian authorities which necessitated the sale.

Nigeria’s case, amid global oil price uncertainties, is worsened by the sharp drop in the global demand for its oil due to environmental, social,climate change issues including the ugly effects of COVID-19 pandemic. Its special story becomes more appalling when considered that our dormant refineries continue to pave the way for unbridled importation of refined petroleum products steadily oiled by rapacious emergency importers and their cronies.

Notwithstanding, the rehabilitation plan keys into the rising domestic demand for fuel and the entry of new private players like Dangote and Waltersmith, etc to make Nigeria Africa’s major petrol refining hub.This is where industry leaders including the NNPC Group ManagingDirector (GMD), Mr Mele Kolo Kyari, complementing the Minister ofState for Petroleum, Mr. Timipre Sylva, should leave no stone unturnedto wrestle the nation from the vice-grip of the few but powerful anti-Nigeria hawks.

They must summon the courage to protect the interests of over 200million Nigerians and generations yet unborn. There is no better timethan now to re-write Nigeria’s post-independence chequered history bysolving the riddle of a leading oil-producing country like Nigeria that isstill ranks as a leading oil-importing nations. Kyari could not have put itany better when he said last year:

‘’We couldn’t fix our refineries and that’s very difficult to explain. Why can’t we fix our refineries? For all 20 years, attempts to fix therefineries failed for very simple reasons, there’s a strategy problem’’.

This strategy tallies with the refinery rehabilitation option which a few vested interests are out to frustrate. Nigerians want Team Kyari, as anational mandate, to drive this strategy to a logical conclusion, pulling the refineries back on stream and to their nameplate capacities usingthe Operate & Maintain (O&M) model for all the sleeping refininggiants to achieve, at least 90 per cent of total installed production capacity by 2023.

This project, unlike past models, holds immense benefit because independent external stakeholders like Ministry of Finance, NEITI, ICRC,PENGASSAN and NUPENG are actively involved, synergizing with KBRand NETCO as NNPC’s Engineers, to ensure right quality, excellent delivery and within budget to maintain plant integrity for at least ten years.

With $1.5 billion, there will be complete overhaul and replacement of major critical equipment to guarantee plant integrity and maintenance for at least ten years after the initial price was diligently negotiateddown from $2.5 billion.

Available global data shows that building Aramco Oil Refinery (250,000-300,000 bpd) in Pakistan was estimated at $10bn, Abrue Lima Project(230,000) in Brazil at $12 bin, Pengerang Refinery and Petrochemical Integrated Development, RAPID (300,000 b/d + 3 mtpa) naptha steamcracker) in Indonesia at $27bn and the 650,000bpd capacity DangoteRefinery in Nigeria at US$19 billion.

Nigeria is a major oil and gas producer in the world that does not refineits abundant hydrocarbon resources but heavily imports most of its PMS needs. Popular thinking is that serious countries don’t sell off their strategic national assets such as refineries even to the highest bidderwhen countries that don’t produce a drop of hydrocarbon still want toown refineries. May God save Nigeria, our dear nation.

If COVID-19 lockdown became global and Nigeria couldn’t import, itwould have been a disaster as there was no capacity to refine crude in-country and as such, there would have been no products at all.

‘’During rehabilitation, by the 18 th month, part of this plant will begin toproduce, particularly the gasoline plants. In rehabilitation, we normally don’t shut down the plant completely, we repair a segment of it, and then it starts working, and then, you move to the next segment.‘’You continue to scale up and that is why, within the four-year period,the contractor would have completely left your premises. What it means in a technical sense is that in 18 months, we will see productioncoming from that plant; we will follow it plant by plant until we are completely done’’, Kyari disclosed.



Posted on April, 1 2021

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