Private Investors Shows Interest in Kaduna, Warri And P/H Refineries With $2bn
The Nigerian government said it is finalising the process for private partners to revamp three existing refineries, located in Kaduna, Warri and Port Harcourt. The deal is expected lead to an investment $2 billion even as 26 private firms have indicated their interest in them.
Minister of State for Petroleum Resources, Ibe Kachikwu who stated this at an oil and conference in Cape Town, South Africa, said that the three refineries with a total of capacity of 450,000 barrel per day (bpd), will reduce the country’s reliance on imports.
Kachikwu further revealed that the government could announce its selection by January or February. “We are almost at a threshold of finalising the process of selection,” he said.
Speaking on the Dangote refinery which has the capacity to process 650,000 (bpd) of oil being built in Nigeria, the minister said the refinery will come onstream by the end of 2019. According to him, the new refinery should be enough to meet local needs.
Referring to the Dangote refinery, the minister said, “That should be enough to meet local needs.”
It will be recalled that the Nigeria National Petroleum Corporation (NNPC) last year said it has launched bidding to find partners to overhaul its ailing refineries which has been producing skeletally in recent time due to decades of mismanagement and widespread graft leaving the country as an OPEC member that is reliant on imported oil products.
Similarly, the government has previously said it was in talks with Chevron, Total and ENI with the intent of allowing them to take over the management and operation of the ailing refineries.
On the country’s crude production and the prospect of adhering to a ceiling agreed with the Organization of the Petroleum Exporting Countries (OPEC), Kachikwu said Nigeria aimed to lift oil output in January to 1.8 million bpd from about 1.6 million to 1.7 million bpd currently, but stressed that it would not breach a ceiling agreement.
“If we get to 1.8 (million), then we need to say ‘hey, close off the taps, because we need to comply,” he said.
He also said oil prices were now encouraging but OPEC had not ruled out further cuts to shore up the market.
“The market is balancing fast …. But do we need to see more cuts? We’ll see,” he said.
OPEC, Russia and other producers cut oil output by about 1.8 million bpd since January. The pact runs to March 2018, but they are considering extending it.
In a similar development, NNPC had in September inaugurated eight committees charged with returning the refineries to their nameplate capacities by the year 2019.
While inaugurating the committees Group Managing Director of the Corporation, Dr. Maikanti Baru, charged them to deploy “out of the box solutions” to ensure that the refineries return to their good old days of top class performance.
“I am convinced that the teams we have selected here today will give the necessary direction towards returning the refineries back to their optimal levels of performance,” the GMD told members of the Committees.
The GMD explained that in executing the assignment, the Committees were expected to deliver well and within schedule as according to him, time was of the essence.
Although the target for the refineries rehab was to return them to 90 per cent capacity utilization before the end of 2019, Dr. Baru stressed that with more commitment from the committees, 100 per cent capacity utilization was achievable.
“We want to show everyone that we can fully run the refineries. You must all work together to operate them at 100 per cent capacity as this was the only way to ensure profitability,” Dr. Baru stated.
The GMD also emphasized the importance of the workforce as according to him “we can fix the refineries but without the right people to operate them, they would go back to where they were or even worse”.