Business Today: Not a single Nigerian refinery worked up to 50% capacity in 2017 – NNPC

No Nigerian refinery worked up to 50% capacity in 2017 – NNPC
Business Today

None of Nigeria’s four refineries worked up to 50 per cent of their capacity at any time during 2017, official figures from the state oil firm, NNPC show.

The NNPC has four major refineries, two in Port Harcourt, Rivers State, which combine to form the Port Harcourt Refining Company (PHRC) with a combined installed capacity of 210,000 barrels per stream day (bpsd); the Kaduna Refining and Petrochemical Company Limited (KRPC) with an installed capacity of 110,000 bpsd; and the Warri Refining and Petrochemical Company Limited (WRPC) with an installed capacity of 125,000 bpsd.

All the refineries have a combined installed capacity of 445,000 barrels per day.

For 2017, the Warri refinery functioned highest in January, utilising 42.6 per cent of its capacity. The Port-Harcourt refinery, for the year, functioned at its peak in December, utilising 41.7 per cent.

The Kaduna refinery had the worst performance in terms of capacity utilisation in 2017. It functioned most in February utilising just 34.4 per cent of its capacity.

The capacity utilisation data for each of the three refineries from January to December 2017 is shown beneath:

Also, a consolidated capacity utilisation chart showed that the refineries performed best in January 2017 at 36.73 per cent of 445,000 bpd. September 2017 recorded the worst consolidated capacity utilisation in 2017 at 5.81 per cent.

Nigeria’s refineries have suffered from lack of proper maintenance for over a decade and this has resulted in gross underperformance.

On the steps taken to increase the utilisation of the refineries, the report showed that the NNPC is inching closer to choosing financial advisors for the refineries as there are plans to rehabilitate and get the refineries utilising up to 90 per cent of their capacities by 2019.

The Group Managing Director of the Corporation, Maikanti Baru, in the April 2018 edition of the NNPC NEWS publication, said the nameplate capacity of the refineries (445,000bpd) is likely to increase after the refineries are rehabilitated.

“The programme we have is total rehabilitation, it is no longer a matter of turn–around maintenance because the level of decay is enormous.
“After the refurbishment, we could get some ‘upsize’ from the debottlenecking side. Whatever upsize that comes will help us increase the volume of petrol that would be coming into the market.”
‘Refineries functioning at 90 per cent capacity by 2019 is impossible’

A petroleum engineer, Bala Zaka, on Monday while speaking with PREMIUM TIMES said he does not think the refineries can function at 90 per cent of their capacity by 2019 based on his experience in the industry

“Considering the current state of the refineries, based on my practical experience in oil and gas activities from the Upstream, Midstream and Downstream, I don’t think we would be able to have our refineries operating at 90 per cent capacity efficiency by 2019,” he said.

Mr Zaka gives his reasons.

“The first thing is to be honest to ourselves, once we are honest then we begin to ask questions like how can we get these refineries functional and then we come up with a time frame. As long as government is a continuum, we can come up with a time frame within which activities can be carried out and what that simply means is that we must not fix the refineries within a given political dispensation,” he said.

On what would make sense as to how to get the refineries to work, he said, “we can plan a five to ten year revamping or refurbishing of the refinery. Therefore, all we need to say is this, that in the next one year we will up our capacity to probably 30 per cent. Then in probably five years we will up our capacity to 60 per cent. Then in seven, eight, or 10 years’ time we will up our refining capacity and efficiency to 90 per cent or 100 per cent, that makes sense.”

He added that the saying the refineries can be revamped to 90 per cent capacity utilisation by 2019 is unrealistic.

“Remember everything about the state of the refineries has been in comatose. So to say you can revamp the refineries within the next probably 18 months is not realistic. So first of all we need to be very honest with ourselves and come up with modalities and a time frame,” Mr Zaka said.

On possible solutions to the current state of the refineries, he said he would not be in support if the government decides to privatise the refineries. He said he would not have problems with a public private partnership.

He said “among all the oil and gas producing nations, it is only in Nigeria that we have demonstrated lack of capacity to manage that industry that constitutes almost 90 per cent of the oxygen of our revenue. So regardless of how you look at it ,if we end up privatising the refineries then the only thing that will be remain to be privatised is the government and governance. ”

For Yomi Orenuga, who runs an oil servicing company, the government is “just playing politics”.

“If you are a technical person you will know that a refinery that was built in the late 70s and some built in the early 80s, with poor maintenance culture over the years, producing at 20 per cent as at today for whatever reason despite all the Turn Around Maintenance done in the past years, then suddenly someone is telling us that by next year we will be at 90 per cent.

“I believe it is not realistic technically. It is impossible for those refineries to function at even 50 perc cent by next year. Technically it makes no sense, technically it is not doable not only because of the timeline they are giving themselves but the fact that even the technology of the refineries have changed times without number over the years.

“Technologies of 1978-79 and 1982-83 is what we are still using today. We still have manual valves. Today, refineries are run by two to three people in the control room. I worked in one before in Holland where three people were running the refinery,” Mr. Orenuga said.

On possible solutions to the state of the refineries, he said, “the cheapest, easiest and most reasonable today, is to build new refineries, but because it is Nigeria we know ourselves, people in governance would favour turn around maintenance because there is a lot of money to be made.”

On the adoption of modular refineries, he said “they are not for a country like Nigeria.”

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