The Nigerian National Petroleum Company Limited (NNPCL) has indicated the possibility of selling the Port Harcourt, Warri, and Kaduna refineries after years of failed revitalization attempts that reportedly cost around $18 billion.
This information was revealed by Bayo Ojulari, the Group Chief Executive Officer of NNPCL, in an interview with Bloomberg at the OPEC International Seminar in Vienna, Austria.
Ojulari disclosed that the company is currently reevaluating its refinery operations and aims to complete the ongoing strategic review by year-end.
"We've invested significantly in refineries over the past few years, incorporating numerous technologies. It's been a challenging journey," he remarked.
He admitted that certain technologies installed did not meet performance expectations, pointing to the age and neglect of the refineries as contributing factors.
"When renovating an old refinery that has been abandoned for a while, we're discovering increasing complexity. Consequently, we are reassessing all our refining strategies and aim to complete this review by the end of the year. This evaluation might result in us adopting slightly different approaches," he mentioned.
When questioned about the possibility of divesting from the refineries, Ojulari suggested that this option is still under consideration.
We're indicating that selling is a possibility. All options are being considered, to be honest. However, our decision will depend on the results of our current reviews.
Regarding Nigeria's oil production costs, he pointed out that the current operational expenses are quite high, primarily because of the investment needed to secure infrastructure.
The cost of crude oil production includes both capital and operational expenses. Currently, the operating costs in Nigeria are over $20 per barrel, which is relatively high. This is partly due to substantial investments made towards securing our pipelines—investments that have led us to achieve 100% availability of these resources today. We anticipate that with time and stability, these costs will decrease; however, for now they remain between $25 and $30 per barrel.
He also stated that the country intends to increase daily oil production to 1.9 million barrels by year-end.
In the meantime, Aliko Dangote, chairman of the Dangote Group, has voiced doubts regarding the operational efficiency of refineries managed by NNPCL.
On July 10, during a visit by members of the Global CEO Africa from Lagos Business School to his refinery in Lekki, Lagos, Dangote expressed skepticism about the effectiveness of NNPCL's current efforts.
"(The turnaround maintenance) is similar to attempting to modernize a car that was built 40 years ago; technology and everything have evolved since then. Even if you replace the engine, the body won't withstand the impact of new technological advancements," Dangote commented.
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