Bayo Ojulari, Group Chief Executive Officer (CEO) of the Nigerian National Petroleum Company (NNPC) Limited, has acknowledged growing complexities in the effort to revamp Nigeria’s state-owned refineries.
Although the Port Harcourt refinery began processing crude oil again on November 26, it was later shut down in May for maintenance. Meanwhile, rehabilitation work is still ongoing at the Warri and Kaduna refineries.
Speaking in an interview with Bloomberg on the sidelines of the 9th OPEC International Seminar in Vienna, Austria, Ojulari said NNPC is in the process of reassessing its refinery strategies, with plans to conclude the review by the end of the year.
“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,” he said. “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.
“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.”
When asked whether the review could result in selling the refineries, Ojulari said a sale remains a possibility.
“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,” he said.
Ojulari also addressed the cost of oil production in Nigeria, stating that operating expenses range between $20 and $30 per barrel.
“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 percent 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.”
Looking ahead, Ojulari said NNPC aims to increase Nigeria’s oil output to 1.9 million barrels per day (bpd) by the end of the year.
