Obasanjo, NNPC differ on return of Warri, Port Harcourt refineries

● Dangote’s $750m offer to run refineries rejected, ex-president claims
● ‘Why NNPC must address credibility gaps in oil sector transparency’
● NAPE: IOC divestments may push indigenous producers to 70% ownership

Fresh drama unfolded yesterday regarding the state of Nigeria’s refineries, which are being rehabilitated for $2.9 billion, as former President Olusegun Obasanjo and the Nigerian National Petroleum Company Limited (NNPCL) disagreed over the return of some of the facilities.

Obasanjo expressed scepticism about the return of the Warri and Port Harcourt refineries, describing the situation as a “heap of lies.” However, NNPCL’s Chief Corporate Communications Officer, Olufemi Soneye, reaffirmed the company’s commitment to transparency, accountability, and ensuring the country’s energy security. He also invited the former president to tour the facilities.

Obasanjo noted that Aliko Dangote had offered $750 million to operate the refineries under a public-private partnership agreement, but the money was returned by his successor, who claimed that NNPCL wanted to run the assets.

Speaking on a Channels TV programme, Obasanjo referred to the return of the refineries using a Yoruba proverb: “The man who claims to have planted 200 heaps of yam but only planted 100 will harvest 100 heaps of yam and 100 heaps of lies.”

In the past month, NNPC announced the return of the 60,000-barrel-per-day Port Harcourt refinery and the Warri refinery, a development that has prompted many stakeholders to question the transparency and accountability of the announcement.

Obasanjo further explained that Shell had declined to take equity or entirely run the refineries during his tenure because the oil giant profits primarily from upstream operations, not downstream. He added that Shell had rejected his offer, citing poor maintenance and corruption in the refineries and their small size—processing 60,000, 100,000, and 120,000 barrels per day—while modern refineries handle around 250,000 barrels per day.

“When someone gives you reasons like that, what can you do? Eventually, Aliko Dangote paid $750 million as part of a PPP arrangement to run the refinery. However, my successor refunded his money, saying NNPC would manage the refineries. I told my successor, ‘They can’t run the refineries.’ But my advice was ignored. Since then, more than $2 billion has been squandered on these refineries, yet they still don’t work,” Obasanjo said.

The former president expressed optimism that the 650,000-barrel-per-day Dangote Refinery would succeed, stressing that the facility would function and deliver results.

In response, Soneye invited Obasanjo to witness the ongoing rehabilitation efforts and called on him to join NNPCL in securing Nigeria’s energy future, emphasising the value of his wisdom and experience.

“We invite our esteemed former president to join us in this effort as we continue to deliver energy security for our nation and provide tangible benefits to Nigerians. His wisdom and experience are invaluable, and we assure him that his advice will always be welcomed and appreciated,” Soneye added.

Soneye also explained that NNPCL had moved beyond the limited Turnaround Maintenance (TAM) approach of the past to embark on a comprehensive rehabilitation of the Port Harcourt Refining Company (PHRC), Warri Refinery, and other facilities.

“This process was not merely the Turnaround Maintenance (TAM) of the past but a full-scale overhaul designed to meet world-class standards. Similarly, we are currently conducting the same comprehensive rehabilitation of the old Port Harcourt Refinery and Kaduna Refinery,” he said.

Soneye further stressed the company’s evolution from a government-owned corporation to a profit-driven international energy firm, adding that NNPCL had moved beyond oil and gas to become an integrated energy company. This transformation, he noted, had shifted the company from being a loss-making organisation to a profit-driven global energy player. He underscored NNPCL’s efforts to position itself as a globally competitive energy company while addressing Nigeria’s pressing energy needs.

A lawyer and former Shell management staff member, Ameh Madaki, called on NNPCL to prioritise transparency and accountability to restore confidence in its operations.

Reacting to Obasanjo’s questioning of the functionality of Nigeria’s Warri and Port Harcourt refineries, Madaki described the scepticism as a reflection of the long-standing opacity in the nation’s oil and gas sector.

“The opaqueness in Nigeria’s oil and gas industry over the years has left even the most optimistic people sceptical about any information coming from NNPCL,” Madaki said. “For Obasanjo, with all his knowledge and experience, to join the long list of sceptics on this issue speaks volumes and has far-reaching implications for Nigeria’s oil and gas industry.”

Madaki emphasised the need for NNPCL to demonstrate greater transparency in its operations, adding that recent announcements regarding the rehabilitation of refineries deserve scrutiny rather than celebration. He said the fact it took the launch of the Dangote Refinery for NNPCL to announce the revival of its long-dormant refineries warrants a thorough investigation rather than any form of celebration.

Madaki also questioned the credibility of the announcements, asking, “What guarantees are there that these announcements are believable and that the refineries will sustain production in the foreseeable future?”

Madaki stressed that significant work remains to restore credibility to NNPCL’s operations and ensure that data and information from the organisation are reliable.

“A whole lot of work still needs to be done to restore credibility and ensure that whatever information and data comes out of NNPCL and its leadership is believable,” he added.

MEANWHILE, the divestment of onshore and shallow water assets by International Oil Companies (IOCs) in Nigeria could enable indigenous oil producers to control up to 70 per cent of the country’s oil production.

Oluseye Ekun, Chairman of the Management Session Committee at the Nigerian Association of Petroleum Explorationists (NAPE), disclosed this, noting that IOCs, including Shell, ExxonMobil, Eni, and Equinor, are shifting their focus to deepwater operations while divesting from assets affected by security concerns, theft, and vandalism.

“These divestments represent a significant opportunity for indigenous oil companies to take a larger role in the sector. If properly managed, the transactions could lead to local operators accounting for approximately 400,000 barrels per day of production, with potential for growth through new investments,” Ekun said.

In Nigeria alone, Shell has reportedly divested $2.4 billion to Renaissance Africa Energy, TotalEnergies has divested over $900 million to Chappal Energies, Eni has divested over $800 million worth of assets to Oando, ExxonMobil’s $1.3 billion sale to Seplat Energy, and Equinor has made a $1.2 billion divestment.

The recoverable oil from these reserves is estimated at 2,325 million barrels, indicating that the near 100-year dominance of IOCs on the continent is nearing its end, with the sector moving towards a $2 trillion value opportunity for national players and investors.

Ekun noted that while these developments position local companies for increased ownership, challenges remain, including access to financing and advanced technology. He also emphasised the need for strong policies to ensure the sustainability of these investments.

“The Federal Government has issued executive orders aimed at improving competitiveness in the sector, but more needs to be done to attract investments and secure the future of the industry,” he added.

Ekun stressed that, with effective management and strategic investments, indigenous operators could drive growth in the sector and solidify their role as key players in Nigeria’s energy landscape. He highlighted that Nigeria’s energy market faces significant challenges due to its overreliance on imported fuel, which compromises energy security.

“Achieving energy independence remains crucial for the country’s economic and social growth,” he stated. “To address this, Nigeria must optimise its oil and gas resources, harnessing the benefits to meet the energy demands of its population and drive sustainable development.”

Ekun noted that the ongoing mini-bid round for deepwater exploration, accompanied by supportive regulatory actions, is poised to attract significant investment to Nigeria’s oil and gas sector, fostering a favourable business environment. He outlined several measures to boost indigenous participation and attract investment in the oil and gas sector, including improving entry costs and terms for new exploration blocks/leases by adopting market-reflective signatory bonuses.

Ekun also called for strategic alliances to access expired but unexplored deepwater blocks, urging the government/NNPCL to support back-in rights terms and conditions before licensing rounds or lease awards. He added that ensuring back-in rights are cash-funded and limited to strategic minimum holdings and encouraging host community involvement in securing and safeguarding energy infrastructure are critical.