Report: Port Harcourt Refinery May Delay Commencement of Operation Till September

Emmanuel Addeh in Abuja

The first phase of a project to rehabilitate Nigeria’s 210,000 barrels per day Port Harcourt refinery, which had been slated for completion in April this year, may not be finished for another four months at least, refinery and oil ministry sources have told Argus Media.

The Nigerian government awarded Italian engineering firm Maire Tecnimont a $1.5 billion contract for the rehabilitation work in April 2021. At the time, the Italian company said the first phase of the work would be completed in 24 months, with the second and third phases taking 32 and 44 months, respectively.

But the first phase has missed its April 2023 target and may not be completed until September, according to an oil ministry source.

The Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPC), Mallam Mele Kyari, had assured Nigerians of its resolve to complete the ongoing rehabilitation of Port Harcourt Refinery by March, 2023.

Kyari had given the assurance during the resumed investigative hearing into the state of the refineries in the country, held by the House of Ad-hoc Committee chaired by Hon. Ganiyu Johnson.

Months later, the national oil company said that the Port-Harcourt refinery will begin operations by the second quarter of 2023.

It said Warri and Kaduna stations had been contracted for quick rehabilitation to reduce fuel scarcity and increase dependence on natural gas through the rehabilitation of three refineries.

Also, erstwhile Minister of State for Petroleum Resources, Chief Timipre Sylva, had said that the 60, 000bpd part of the refinery would be completed by first quarter of 2023.

The minister of State who stated this during President Muhammadu Buhari administration scorecard 2015-2023 organised by the Ministry of Information and Culture, also declared that petroleum price should be market driven as subsidizing petroleum products is no longer sustainable.

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But the source at Port Harcourt suggested that September may be ambitious, indicating that a quick-fix programme at Nigeria’s 125,000 bpd Warri refinery, scheduled to finish by November, could be completed first.

Warri is currently undergoing a $492 million repair programme under a contract awarded to South Korean engineering firm Daewoo.

Port Harcourt, Warri and state-owned NNPC’s other refinery — the 110,000 bpd Kaduna plant — operated at under a fifth of their combined capacity in the 10 years before 2019.

Warri and Kaduna were shut down in 2019, and Port Harcourt in 2020, leaving Nigeria totally reliant on imports to serve its 485,000 bpd oil products market.

The Port Harcourt project is understood to have fallen victim to the perennial constraints of Nigeria’s public finance management, the report stated.

Unlike national personnel expenditure that is released monthly and overhead expenditure that averages eight releases annually, funds for capital expenditure are released infrequently in tranches that are often delayed until the second half of each year, it added.

This has meant Port Harcourt is not always able to meet Maire Tecnimont’s invoices when they are due.

Sources have also questioned Maire Tecnimont’s processes for selecting and managing sub-contractors, saying weak performance by some sub-contractors has contributed to the delay. Maire Tecnimont did not respond to Argus’ requests for information on the missed deadline.

Although the Port Harcourt refinery was shut down in April 2020, NNPC occasionally brings imported product through the refinery’s jetty for storage in its tank farms.

NNPC has been Nigeria’s only importer of gasoline since 2017. Before the shutdown, Port Harcourt had operated at only minimal rates for years, but its tanks still hold some intermediate products.

Argus quoted data from Vortexa as  showing  that a 17,700t of vacuum gasoil (VGO) was shipped from Port Harcourt to Portugal earlier this month.