The Sorry State of Nigerian Refineries
By Dirisu Yakubu with agency reports
The cost of Turn Around Maintenance (TAM) of Nigeria’s four refineries from year 2000 to date is nearly the total cost of building the refineries, report has shown.
A total of 1.853Billion dollars had been spent to build the refineries in the past 17 years. The Port Harcourt refinery built in 1985 at $850 million has a 150,000-bpd capacity; the125, 000 bpd Warri refinery was built in 1978 at $478m and the 110,000 bpd Kaduna refinery was built in 1976 at the cost of $525 million. The refineries have continued to produce grossly below their installed capacity levels.
However, investigations revealed that over $1.6 billion had gone into the maintenance of the four refineries since 2000.
The Port Harcourt refinery, just like its counterparts in Kaduna and Warri has witnessed the worst maintenance in the period under review.
The only publicly known TAM carried on particularly the Port Harcourt refinery was a routine maintenance on the facility 17 years ago and despite being one of the biggest in Africa’s, Nigeria’s refineries have suffered the worst maintenance failures in the last decade.
Minister of State for petroleum Resources, Dr. Ibe Kachikwu last week admitted that conclusive turn around maintenance of Nigeria’s refineries have not been done over the last 10 to 15 years as this has left the plants “far dilapidated.”
“Our refineries have not been maintained at the same levels that other nearby countries have continued to do theirs. Look at Ghana and Ivory Coast, the same refineries, about the same ages and working at over 90 per cent capacity,” The minister told a gathering of oil stakeholders in Abuja.
Experts say that at the heart of Nigeria’s refining problems has been the lack of maintenance of the plants. A former Managing Director of both the Port Harcourt and Kaduna refineries Engr. Alex Ogedegbe said recently that refineries cannot be run properly in Nigeria because of the way they are organized.
Referring to some of the African refineries mentioned, Engr. Ogedegbe said that because “the refineries are run by companies independent of the government, they understand the market and how a refinery is supposed to be run properly. Whereas in Nigeria, the refineries are owned and run by government,” In other words, “it is a monopoly,” he stated.
Analysis of the research, showed that aside Dangote’s $9 billion refinery which when completed will be the world’ largest single train refinery with a production capacity of about 650,000 barrels per day, Algeria’s Skikda refinery built in 1983 is currently Africa’s largest refinery with daily production of over 320,000 barrels.
Next in ranking among Africa’s five largest refineries according to the research findings are Libya’s Ra’s Lanuf refinery built in 1984 with a production capacity of 220,000 barrels per day (bpd) and Port Harcourt refinery built in 1965 and expanded in 1989 to 210,000 bpd.
South Africa’s SAPREF Durban refinery built 52 years ago with a production capacity of up to 180,000 bpd and Egypt’s Cairo Mostorod Refinery with 142,000 bpd, were ranked fourth and fifth based on their refining capacity.
Within the last decade, Algeria’s over 300,000 bpd refinery at Skikda has undergone a full-scale scheduled maintenance.
Algeria’s Skikda refinery usually undergoes at least one full-scale scheduled TAM on a 10-yearly basis as required by the Algerian law, information sourced from state media showed.
Five years ago, Algerian state oil firm Sonatrach completely closed the refinery for up to six months to carry out improvement work. Last year, Sonatrach was said to have awarded engineering contracts to upgrade the capacity of the refinery.
On the other hand, its CEO Amine Mazouzi in a December 2016 interview with markets intelligence provider, Oxford Business Group (OBG), said the country had initiated an ambitious programme to revamp the country’s three other existing refineries.
While the plan has attracted 49 offers from international energy companies who are willing to commit around $6 billion, starting in 2019-20, Algeria will recover its historic role as a petrol and gas oil exporter.
SAPREF Durban, South Africa’s largest oil refinery jointly operated by Shell and BP which started operation in 1960 about the time as Nigeria’s old Port Harcourt refinery was built, completed its refinery maintenance program in mid-2013 and is now working on a plan to conclude another circle of turn around this year, according to information sourced from its website.
“We expect SAPREF to deliver a safe flawless 2017 Turnaround,” Ton Wielers – SAPREF’s Managing Director said in Columns, the refinery’s in-house magazine publication for April. SAPREF will import refined product when the refinery is shut down for the 2017 turnaround.
South Africa has the second-largest crude oil refining capacity in Africa and has about six refineries, surpassed only by Egypt, according to Oil & Gas Journal’s 2015 estimates. In 2013, Oil giant BP unveiled plans to invest $596 million over the next five years to upgrade the SAPREF refinery.
Also, South Africa’s state-owned company Petroleum Oil and Gas Corporation of South Africa (PetroSA) is pushing for the construction of a new 300,000 bpd refinery to be ready later in 2017.
Egypt as part of an ongoing government plan to address petroleum product supply gaps has started an ambitious plan to increase the oil-processing capacity of the country’s Mostorod refinery one of its largest, with a further refinery being constructed adjacent to it (the Citadel refinery).
Oil minister Tarek El Molla told state newspaper in September last year the refinery is expected to begin operating by the end of 2017 as actual production is expected in 2018.
The new Citadel refinery at the Mostorod Petroleum Complex is being built to refine 100,000bpd crude, the newspaper reported.
While these four refineries continue to weather Africa’s difficult refining landscape, Nigeria, Africa’s number one oil producer and exporter continues to struggle to fix her refining system that has left the country condemned to petrol imports.
Comparing the refineries in Egypt, Libya and South Africa with Nigeria, Ogedegbe said despite the fact these refineries are much older than NNPC’s refinery in Port Harcourt, turnaround maintenance were conducted on the refineries and they run better.
“The refinery in Port Harcourt runs at about 10 per cent of its capacity maximum in the last three years whereas those other refineries have been running at over 80 per cent of their capacities because they are well maintained. These are the differences and they are very important. The owner of a refinery needs to understand the technicalities, the business model and have the money. The federal government does not have the money to put into these refineries,”
Also speaking recently, Professor Ibrahim Ali Mohammed-Dabo of the Department of Chemical Engineering, Ahmadu Bello University, Zaria said the major problem with the Nigerian refining system has been corruption.
“We have been budgeting money to do this but when the money comes many (it is not used for purpose it was budgeted for),” Prof Mohammed-Dabo who led a team that built a mini-refinery in the ABU said.