Group Chief Executive Officer of the Nigerian National Petroleum Company Limited, NNPCL, Bayo Ojulari, has revealed that the company was considering selling some of its refineries as it was grappling with some challenges in their rehabilitation.
Ojulari dropped the bombshell in an interview with Bloomberg on Thursday on the sidelines of the 9th OPEC International Seminar in Vienna, Austria, disclosing that a strategic review of NNPC’s refinery operations was underway, and should be concluded before the end of the year.
“We’re reviewing all our refinery strategies now,’ the NNPCL boss said. “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.”
Asked to confirm if the strategic reviews would include putting the refineries the refineries up for sale, Ojulari responded: “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.”
For some decades now, successive governments had spent humongous amounts of money on turn-around-maintenance (TAM) for the country’s three major refineries-Port Harcourt, Warri and Kaduna- without success.
Although the Port Harcourt refinery resumed operations briefly in November 2023, it was shut down again in May for maintenance.
Indeed, not a few Nigerians believe that the refineries had become a conduit pipe for corrupt officials to drain the country of valuable resources that could otherwise have been ploughed into projects that would benefit Nigerians.
However, Ojulari, in his Bloomberg interview, attributed some of the setbacks to outdated infrastructure and underperforming technologies.
Hear Ojulari “So (for the) refineries, we made quite a lot of investment over the last several years and brought in a lot of technologies. We’ve been challenged.
“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.”
He also spoke on the high cost of oil production in Nigeria, disclosing that operating costs range between $25 and $30 per barrel, partly due to heavy spending on pipeline security.
“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 per cent 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.”
The challenges notwithstanding, Ojulari said the NNPC was working assiduously at increasing Nigeria’s oil output to 1.9 million barrels per day by the end of the year.
