Years after it went comatose, the Port-Harcourt Refinery rose up from ‘death’, courtesy of the seriousness attached to the all-important plant by its owners, the Nigerian National Petroleum Corporation Ltd. (NNPCL).
Little did stakeholders anticipate such a milestone could be swiftly achieved, boosting Nigeria’s domestic refining capacity.
After years of delays, maintenance challenges and rising dependency on imported refined petroleum products, the inauguration of the plant promises to be a potential shift in the country’s fuel supply dynamics.
While the government and industry stakeholders have lauded the achievement, the re-establishment of the operation did not go without hydra-headed challenges.
The Port-Harcourt refinery comprises two units, with the old facility capacity of 60,000 barrels per day (bpd) and the new plant, 150,000 bpd, both summing up to 210,000 bpd.
The refinery was shut down in March 2019 for the first phase of repair works after the government secured the services of Italy’s Maire Tecnimont, to handle the review of the facility with the oil major Eni as technical adviser.
In 2021, NNPCL announced the commencement of works at the PHRC after the Federal Executive Council (FEC) approved $1.5 billion for the project.
In December 2023, the government announced the completion of the mechanical and the flare start-off, one of Nigeria’s oldest and most critical facilities, inaugurated to reduce dependency on foreign refineries.
With the capacity to process over 210,000 barrels of crude oil per day, the refinery is expected to significantly boost local production of petroleum products, including petrol, diesel and kerosene.
In a landmark move, NNPC Ltd. officially began production at the facility, signaling a return to active refining operations after years of dormancy and extensive rehabilitation work.
The christening on Nov. 26, was attended by major stakeholders: government officials and industry experts, all of who expressed optimism about the refinery’s potential to enhance domestic fuel supply and job creation.
While the inauguration is a monumental achievement, the journey to full operational capacity has not been without its noticeable hiccups.
Reports indicate that there are still several operational and logistical challenges facing the refinery, including issues with the supply of crude, infrastructure inadequacies and technical glitches.
Also, there are concerns about the refinery’s ability to operate at full capacity consistently, as its systems have suffered from years of underinvestment.
The prolonged downtime and intermittent operations have raised doubts about whether the refinery can contribute meaningfully to meeting Nigeria’s domestic fuel needs without delay.
Though the refinery’s management has acknowledged some of the identified setbacks, yet, it remains committed to resolving the issues in the short-term to avoid further disruptions.
In spite of the challenges, stakeholders within Nigeria’s oil and gas sector including Dr Ayodele Oni, a Partner at Bloomfield Law Practice, notes the reopening is a positive step towards addressing the nation’s fuel supply crisis.
Oni says the Port-Harcourt’s production is expected to significantly reduce the nation’s dependence on imported fuel, which has long been a source of concern due to the foreign exchange burden and the fluctuations in international oil prices.
According to him, for Nigeria’s local refineries, the Port-Harcourt refinery holds the promise of reducing astronomical price of fuel imports, by ultimately saving the country’s billions of dollars annually.
It is also anticipated to create thousands of jobs, both directly and indirectly through the supply chain, from transportation to distribution.
Mr Mike Osatuyi, a former National Operations Controller of the Independent Petroleum marketers Association of Nigeria (lPMAN), says by the inauguration, the refinery is expected to contribute to Nigeria’s energy security by bolstering its refining capacity.
Osatuyi says this shift can pave the way for more refineries to return to full capacity and help Nigeria meet its increasing energy demand.
According to him, the refinery’s operational success could drive the government’s push for improved infrastructure in the downstream oil and gas sector, thereby creating a more self-sufficient and sustainable energy ecosystem.
“Local businesses and citizens stand to benefit from a more stable and reliable supply of fuel, which is crucial for everyday activities and economic growth.
Also, industry observers, according to him, will be quick to predict that an efficient, fully operational Port-Harcourt refinery can lead to reduction in the country’s fuel scarcity which has led to long- queues at filling stations and rising fuel prices.
An energy expert, Mr Salisu Danjuma, explains the corporation’s assignment should not end with the Port Harcourt Refinery alone.
Danjuma notes the corporation has laid out plans to increase its capacity with the completion of the Warri and Kaduna refineries, as well as enhancing the operations of the Port Harcourt plant.
He believes the goal is to make Nigeria a net exporter of refined petroleum products, reducing the country’s dependency on imported fuels while creating a robust energy sector that can support both domestic and international demand.
According to him, while the current phase of the Port Harcourt refinery’s operations is a positive indicator of progress, NNPC Ltd. still faces the task of addressing its operational challenges and ensuring long-term sustainability.
“The government has committed to investing in more capacity expansion and technology upgrades to modernise the country’s refineries.
“The commissioning of the Port Harcourt Refinery is undoubtedly a significant step for Nigeria’s oil and gas sector, with the potential to reduce the country’s fuel import bill and improve domestic fuel supply.
“While the refinery’s operations face some initial setbacks, the initiative is hailed by stakeholders as a critical move toward enhancing the nation’s energy security, boosting economic growth, and creating employment opportunities.
“Moving forward, the full success of the Port Harcourt Refinery will depend on the NNPC Ltd.’s ability to tackle its current operational challenges, ramp up production and create a stable and efficient refining ecosystem.
“If these obstacles are overcome, Nigeria could see a transformative shift in its energy landscape, reducing its reliance on imports and promoting self-sufficiency,” he added.
Reacting, the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG), acknowledged the support of President Bola Tinubu, as well as the collaborative efforts of the NNPCL Board and contractors for the successful hauling of the facility.
Its President, Mr William Akporehe, and General Secretary, Mr Afolabi Olawale, described the commencement of the crude oil processing and the dispatch of petroleum products from the refinery as a landmark achievement that resonates with the aspirations of Nigerian citizens.
The union declared that the achievement demonstrated by NNPCL’s commitment to the country’s sustainable economic growth cannot be over-emphasised.
It commended the Group Managing Director of the corporation, Mele Kyari, for steering PHRC’s rehabilitation to completion, despite numerous challenges.
Nigeria owns four refineries: two in Port Harcourt and one each in Warri and Kaduna; but they have been moribund for years despite the Turn-Around-Maintenance (TAM) efforts.
The moribund state of the local refineries pushed Nigeria to depend solely on the importation of petroleum products for domestic use for several years, constituting a major drain on the nation’s foreign reserves.
For decades, successive administrations moves at reviving the nation’s refineries to reduce dependency on petrol importation failed.
In 2015, former President Muhammadu Buhari pledged to optimise those performing below capacity and boost foreign reserves by halting importation of refined fuel.
In November 2018, that administration scheduled December 2019 as the terminal date for three of the refineries to attain full production capacity to end petroleum importation and later shifted same to 2020.
Though, while the 2020 deadline was not realised, the government had spent N10.23 billion as at June 2020 on three of the refineries which processed zero crude.
By May 2023, the Federal House of Representatives Ad-hoc Committee on the state of refineries in the country made a disclosure that the federal government had spent over N11 trillion on the rehabilitation of the refineries between 2010 to 2023.
Just August 2023, President Bola Tinubu assurance that the PHRC would become functional by December after numerous failed attempts is now a reality.
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PRESS STATEMENT
NEITI launches research on impact of energy transition, risks & opportunities on Nigeria’s economy
The Nigeria Extractive Industries Transparency Initiative (NEITI), this Tuesday in Abuja launched research on the impacts of energy transition on Nigeria’s economy. A workshop on the focus, approach and methodology for the study which held in Abuja, brought together key stakeholders, experts, and policymakers to refine the study’s approach and provide strategic insights that would position Nigeria amidst global shifts in energy priorities.
Delivering the opening remarks on behalf of the NEITI Board, its Chairman, Senator George Akume represented by its alternate Chair, Ambassador Mathew Adoli, emphasized the urgent need for Nigeria to strategically respond to the challenges and opportunities presented by the global move towards cleaner energy.
“The transition from fossil fuels to renewable energy sources is no longer an abstract concept. It is a reality shaping policies, markets, and investment decisions worldwide. For Nigeria, an oil-dependent economy, this presents profound challenges and opportunities”. “Our ability to navigate this transition effectively will determine not only the future of our energy sector but also the overall sustainability of our economy.” The Chairman stated.
The Chair outlined three critical areas of focus for the study which include, Revenue Diversification by accelerating reforms in non-oil sectors which should prepare Nigeria for declining oil revenues; Investment in Clean Energy that would attract global and domestic investment in renewable energy infrastructure and Just Transition that would ensure an inclusive and equitable shift to clean energy.
He reaffirmed the NSWG’s commitment to providing strategic oversight and facilitating stakeholder engagements to ensure the success of the study.
Executive Secretary of NEITI, Dr. Orji Ogbonnaya Orji, further highlighted the study’s significance, linking it to key findings from the recently released NEITI’s 2023 Oil and Gas Industry Report. Some of these findings are the 15% decline in Oil Revenues between 2022-2023; and 8% decrease in Nigeria’s production volumes between 2022 and 2023 with the reserve-replacement ratio steadily declining.
Dr. Orji emphasised that the findings in the NEITI reports signaled the growing impact of global energy transition policies, which underscores the urgency of addressing Nigeria’s energy transition impacts.
The executive secretary also noted the progress that Nigeria has made against oil theft, pointing out that the NEITI 2023 report showed a reduction of 79% in crude oil losses due to theft. This he said, Reflects improved resource management. The NEITI Executive Secretary, commended the office of the National Security Adviser, the Nigeria Armed Forces and our security agencies for the drastic approach so far resulting in visible decline in Crude Theft as disclosed by NEITI’s latest report. Dr Orji appealed to Security Agencies to sustain the fight against oil theft.
The Energy Transition methodology workshop provided an interactive platform for participants to make input into the study’s framework, ensuring that it is rigorous, inclusive, and reflective of Nigeria’s unique circumstances. Stakeholders were encouraged to contribute by suggesting additional data sources to enrich the study, identify gaps in the research framework and propose strategies to ensure broad consultation across sectors.
“This is not just a NEITI study; it is a collective project, its findings will inform national policies, guide investment decisions, and shape Nigeria’s future in a world transitioning to clean energy.” Dr. Orji stated.
He enumerated the terms of reference and scope of the study to include establishing a global trend and projections on crude oil demand in the next ten years, Reviewing Nigeria’s energy transition plan, related government policies and its adequacy for the country’s transition targets, supporting NEITI’s mandate in a changing energy landscape and aligning government’s ET plan with the EITI evolving standard on climate change and energy transition.
The representative of the Civil Society on the NEITI Board, Dr Erisa Danladi Sarki welcomed the inclusion of civil society in the ongoing stakeholder’s consultation process for the study but called for particular attention to be paid to the negative impacts of energy transition and climate change on women and children as well as gender diversity.
Stakeholders at the meeting affirmed their shared commitments to transparency, accountability and collaboration. The study’s outcomes will play a pivotal role in shaping Nigeria’s policy responses, guiding investments in clean energy, and ensuring that the energy transition is both sustainable and inclusive.
