Port Harcourt, Warri Refineries commence preliminary production, says NNPC
The Nigerian National Petroleum Corporation (NNPC), says Port Harcourt and Warri refineries have commenced preliminary production of petroleum products after successful test-runs.
This is contained in a statement by the Group General Manager, Group Public Affairs Division of NNPC, Mr Ohi Alegbe, in Abuja on Wednesday.
The statement explained that this followed successful re-streaming after a nine-month phased rehabilitation by in-house engineers and technicians.
It stated that PHRC was ramping up its operation to about 60 per cent of its 210,000 barrels per day name plate capacity.
According to the statement, WRPC production is projected to hit 80 per cent of its installed 125,000 bpd capacity.
It stated that the PHRC was projected to boost the nation’s local refining capacity with a product yield of five million litres of petrol per day.
It added that Warri Refinery would contribute 3.5 million litres of petrol to local refining capacity.
The statement explained that NNPC adopted the phased rehabilitation after the Original Refinery Builders (ORB), who were initially contacted for the project, came up with unfavorable terms.
It explained that a decision was taken in 2011 to rehabilitate all the refineries using the ORB of each of the refineries.
“We were impelled to switch strategy after the ORBs declined participation and nominated some partners in their stead who came up with outrageously unfavorable terms’’, it stated.
It stressed that the nominated partners, as sole-bidders, came up with humongous price offers after two years of thorough and exhaustive scope of work definition and price negotiations.
It explained that the proxies were also unwilling to provide post rehabilitation performance guarantees.
“The phased rehabilitation strategy entailed phased and simultaneous rehabilitation of all refineries using in-house and locally available resources in line with the spirit and letter of the Nigerian Content Law.
“It also involved the use of Original Equipment Manufacturer representatives to effect major equipment overhaul and rehabilitation.’’
It stated that the phased rehabilitation, which started in October 2014 after the required funding stream was established, created a 70-per cent reduction in costs.
It said this had helped largely in mitigating the financing challenge of refinery rehabilitation.
It stated that with the successful re-streaming of the PHRC and WRPC, attention had moved to the 110,000 barrels per day Kaduna Refining and Petrochemicals Company (KRPC).
According to the statement, the KRPC is billed to come on stream soon.
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6 Comments
Well, I have heard stories like this before especially when I was at the KRPC. At the time we only had Areas 1 and 2 working, and were trying to bring on Area 3 (FCC Unit). I was shocked to hear on radio and TV that the Govt. was reporting 90% capacity utilisation at KRPC!!! And like we are being told now, Chiyoda (the ORB) had declined the TAM which was later taken up by Total. So, until I see the output from those refineries as ascertained by NNPC I wouldn’t believe this story. Something else, we need to worry about is how the NNPC carried out TAM with only 30% of what the ORBs had quoted. In engineering, there is very little you can do to cut down actual cost of facilities which you require to meet specific qualities. This also means we will have to wait and see what OPEX results from this very cheap TAM.
I agree, they’re cutting corners and I hope the new administration is not hoodwinked. Those refineries need to be quickly sold..this restart smells of an attempt to keep the asset in the family, and hope to continue stealing when the new sheriff leaves office. NUPENG tricks!
Your point is well made on the potential for quick fix and sleaze.But the refineries can be compared to you driving an after-market car after the original manufacturers have stopped product support or spares for the equipment. If you were driving such a car and had no money for a new car, what would you do? Go for the (ORB) to quote you exorbitant repair rates using OEMs or put together your own repair resource team using OEMs (original equipment manufacturer) authorized spares? The ORBs deal with top government people and build up 10 percentages into their contract TAM rates Well NNPC went for the cheaper option. What needs to be done is to ask the technical and bureaucrats to give their guarantee or go to jail for their decision. If it works they should be rewarded massively with bonuses and the model scaled up for other national assets. The truth is that nothing lasts for ever and the lifecycle for a refinery like a car is not forever even with the best mainteinance. There should be a lifecycle and investment recoupment plan for every national investment.Of course even the companies that assembled the refinery in 1978 likely is gone out of business now. In the absence of such a bold national plan, the workers went for the best way to keep their jobs… repair it inhouse.It may work.It may not. Given the fact that the hammer is hanging over NNPC, they will likely make it work for a the short to medium term.
Mukhtari, from my contributions you can see that I am sceptical of Govt. I prefer that Govt. comes out with the unique challenges of the refineries so people may proffer the right solutions. With the NNPC saying they will achieve 80% of installed capacity with 70% cost savings on ORB, and considering the uncertainties you have noted in your contribution, it becomes clear why such claims should be taking with a pinch of salt. We are engineers, and I believe you are knowledgeable about this topic too. So it is very reasonable to question the 70% cost savings the NNPC is claiming for utilising in-house personnel versus ORBs. I will like to apply your analogy in explaining why I question the truth in their statements: if I buy a brown new car with fabric seats for say N100 and have the option of the same car with leader seat at N110, and then I decided that the car manufacturer should fix the same leader seats in the car I just bought, don’t you think that the total cost of my car would be something like N108 if not N110?? If this analogy is sensible, how did the NNPC save 70% of the MRB quote? We need to first verify what NNPC paid versus what the ORB offered in terms of quality and quantity i.e. compare apple for apple.
I have rock-solid information that the refinery engineers and technicians have been ready to perform workable TAM and that the spares for this had been imported into the country since 2011. However,those politicians bent on sales of the refinery for their own pecuniary gains stalled the in-house TAM, and crippled the refineries. This was done to prove that the refineries were unworkable. The ever-spiraling subsidy and resistance of some in the industry led the GEJ admin to authorize the TAM October 2014. There is in-house expertise to maintain these refineries, especially since NNPC sent a lot of these engineers for training with the original builders and OEMs, before and after the building of the refineries. What we need is honesty and transparency and we can get the most from these huge investments
up GEJ, for starting the in house renovation, God bless you for the work, and what you did for this nation may it never go in vain. in Jesus name i have prayed. Amen
We will review and take appropriate action.