NNPC Reassessing Refinery Strategy, Considering Offloading Refineries:
The Nigerian National Petroleum Company (NNPC) Limited is considering offloading its state-owned refineries due to the limited success and high costs of rehabilitation efforts.
Group Chief Executive Officer, Bayo Ojulari, indicated that a comprehensive internal review of their entire refinery strategy is underway and expected to conclude by the end of 2025.
Challenges with Refinery Rehabilitation:
1. Costly and Ineffective: Despite a $3 billion investment approved between 2021 and 2023 for the Port Harcourt, Warri, and Kaduna refineries, progress has stalled.
2. Technical Setbacks: Ojulari described the ongoing overhaul of Nigeria’s ageing refineries as increasingly complex and fraught with technical setbacks, particularly due to ageing infrastructure that has been dormant for extended periods.
3. Port Harcourt Refinery: The $1.5 billion rehabilitation package for the 61-year-old Port Harcourt Refinery, approved in 2021, has not led to full operational capacity. It briefly resumed crude processing in late 2023 but shut down again in May 2025 for maintenance.
4. Warri and Kaduna Refineries: These refineries, aged 46 and 44 years respectively, remain under rehabilitation.
5. Underutilization: The country’s four state-owned refineries have a combined installed capacity of 445,000 barrels per day (bpd) but have operated far below capacity or remained idle for years.
Criticism and Policy Shift:
1. Past Spending: The potential sale comes amidst criticism of NNPC's past spending, with the National Assembly accusing the company of spending over N11.35 trillion (approximately $25 billion) across a decade on the facilities with little to show for it.
2. Alignment with Reforms: This move aligns with broader reforms in Nigeria's oil sector that favor private sector involvement, marking a significant policy shift away from public funding for downstream infrastructure.
Nigeria's Crude Oil Production:
1. High Operating Costs: Crude oil production costs remain relatively high, ranging between $20 and $30 per barrel, largely due to expenses involved in securing oil infrastructure.
2. Improved Pipeline Availability: Ojulari noted that Nigeria has achieved 100% pipeline availability following significant security-related investments.
3. Optimistic Outlook: Despite the high costs, NNPC is optimistic about a rebound in oil production, with the government aiming to reach an output level of 1.9 million barrels per day by the end of 2025, up from current figures that remain below OPEC quotas.