The ambitious efforts to revitalise Nigeria’s state-owned refineries are facing increasing hurdles, according to Bayo Ojulari, Group Chief Executive Officer of the Nigerian National Petroleum Company (NNPC) Limited.
Speaking to Bloomberg on the sidelines of the 9th OPEC International Seminar in Vienna, Austria, Ojulari acknowledged the growing complexities in bringing the nation’s refining capacity back online.
This admission comes as Nigerians continue to grapple with fuel scarcity and high prices, despite the government’s renewed commitment to local refining.
The Port Harcourt refinery, a key focus of the rehabilitation drive, briefly resumed processing crude oil on November 26 of last year.
However, its operations were short-lived, as the facility was shut down again in May for maintenance, halting the flow of locally refined products.
Meanwhile, rehabilitation work at the Warri and Kaduna refineries remains ongoing, with no clear timeline for their full resumption.
Ojulari revealed that the NNPC is currently reassessing its refinery strategies, with a comprehensive review expected to be finalized by the end of the year.
“So refineries, we made quite a lot of investment over the last several years and brought in a lot of technologies. We’ve been challenged,” he said.
“Some of those technologies have not worked as we expected so far. But also, as you know, when you’re refining a very old refinery that has been abandoned for some time, what we’re finding is that it’s becoming a little bit more complicated.
“So we’re reviewing all our refinery strategies now. We hope before the end of the year, we’ll be able to conclude that review. That review may lead to us doing things slightly differently.”
When asked whether the review could result in selling the refineries, Ojulari said a sale remains a possibility.
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“But what we’re saying is that sale is not out of the question. All the options are on the table, to be frank, but that decision will be based on the outcome of the reviews we’re doing now,” he said.
Ojulari also addressed the cost of oil production in Nigeria, stating that operating expenses range between $20 and $30 per barrel.
“For the cost of crude production, there’s a capital cost and there are the operating costs,” he said. “The operating cost right now in Nigeria is hovering over $20 per barrel, which is quite high.
“Part of that is because of the investment we’ve had to make in terms of security of our pipelines, which as you know, today we have 100 percent availability of our pipelines. That came out of significant investment.
“So we believe with time, with stability, that cost will start going down, but for now it’s somewhere between $25 and $30 a barrel.”
Moving forward, Ojulari said NNPC aims to increase Nigeria’s oil output to 1.9 million barrels per day (bpd) by the end of the year.
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