Bayo Ojulari, Group Chief Executive Officer of the Nigerian National Petroleum Company (NNPC) Limited, has stated that the company may sell off some of its refineries as it continues to face setbacks in their rehabilitation.
Ojulari made the disclosure during an interview with Bloomberg on Thursday at the 9th OPEC International Seminar held in Vienna, Austria, where he confirmed that a strategic review of the company’s refinery operations is underway and expected to be completed before year-end.
“So we’re reviewing all our refinery strategies now. We hope before the end of the year, we’ll be able to conclude that review. That review may lead to us doing things slightly differently,” he said.
When asked if the review could lead to the sale of NNPC’s refineries, Ojulari responded, “But what we’re saying is that sale is not out of the question. All the options are on the table, to be frank, but that decision will be based on the outcome of the reviews we’re doing now .
Nigeria has been working to rehabilitate its ageing state-owned refineries, notably those in Port Harcourt, Warri and Kaduna. The Port Harcourt refinery briefly resumed operations in November 2023, but was shut down again in May for maintenance.
He attributed the recurring setbacks to obsolete infrastructure and underperforming technologies.
So refineries, we made quite a lot of investment over the last several years and brought in a lot of technologies. We’ve been challenged. Some of those technologies have not worked as we expected so far. But also, as you know, when you’re refining a very old refinery that has been abandoned for some time, what we’re finding is that it’s becoming a little bit more complicated,” he said.
The NNPC chief also raised concerns over Nigeria’s high crude oil production costs, saying the country currently spends between $25 and $30 per barrel, a figure driven partly by the heavy investments required to secure oil pipelines.
“For the cost of crude production, there’s a capital cost and there are the operating costs,” he said. “The operating cost right now in Nigeria is hovering over $20 per barrel, which is quite high.
“Part of that is because of the investment we’ve had to make in terms of security of our pipelines, which, as you know, today we have 100 per cent availability of our pipelines. That came out of significant investment.
“So we believe with time, with stability, that cost will start going down, but for now it’s somewhere between $25 and $30 a barrel,” he said.
Ojulari expressed confidence in the company’s outlook, noting that NNPC is aiming to boost Nigeria’s oil production to 1.9 million barrels per day before the year ends, despite existing challenges.
Nigerian Tribune