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The Nigerian National Petroleum Company Limited (NNPC Ltd) has said it will not proceed with the rehabilitation and operation of its refineries unless a clear path to profitability and sustainability is established.
The Group Chief Executive Officer of NNPC Ltd, Bayo Ojulari, disclosed this on Tuesday at a press briefing in Abuja, explaining that the company’s new approach to refinery rehabilitation was designed to ensure that technical partners have a direct stake in the success of the facilities.
Ojulari said the previous rehabilitation model did not give contractors and operators sufficient incentive to ensure long-term performance, as NNPC bore the cost of financing, operations and maintenance, as well as crude supply.
According to him, the company had abandoned that model and is now pursuing a technical equity partnership arrangement under which prospective partners would take equity and have “skin in the game”.
He said: “We will not go ahead with the refinery if we cannot see a path to profitability. We want a refinery that is self-sustaining, profitable and sustainable.”
Ojulari also disclosed that prospective partners had carried out extensive technical assessments of the refineries, with more than 30 top engineers spending over three months conducting intrusive assessments at no cost to NNPC.
He said the exercise revealed that some of the earlier plans could leave the facilities five to ten years behind current technology if implemented without further upgrades.
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“We have learnt that we need to embed newer technology, monitoring and optimisation into what we are doing,” he said.
The NNPC boss said the company was also studying lessons from advanced refineries in other countries, including facilities visited during a recent trip to China, where some plants were operating at between 120 and 140 per cent of their design capacity through bottleneck optimisation.
He said the objective was to apply relevant technologies and operational practices to improve the efficiency and competitiveness of Nigeria’s refineries.
Ojulari added that the refineries would also need to develop petrochemical capabilities, noting that profitability would depend not only on refining crude but also on maximising value across the downstream value chain.
He said the new strategy was intended to ensure that NNPC’s refineries operate sustainably and compete effectively with existing facilities in the Nigerian market.
