Why NNPC May Sell Refineries – CEO

Bashir Bayo Ojulari, the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPC Ltd.), has revealed that the company is considering selling some of its refineries due to persistent challenges encountered in their rehabilitation.

Speaking to Bloomberg on Thursday at the 9th OPEC International Seminar in Vienna, Austria, Ojulari disclosed that a strategic review of NNPC’s refinery operations is currently underway and is expected to conclude before the end of the year.

He stated, “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.”

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When directly asked if this could include putting the refineries up for sale, Ojulari confirmed, “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 engaged in efforts to rehabilitate its long-dormant state-owned refineries, including those located in Port Harcourt, Warri, and Kaduna.

Although the Port Harcourt refinery briefly resumed operations in November 2023, it was shut down again in May for maintenance. Ojulari attributed some of these setbacks to outdated infrastructure and underperforming technologies.

He elaborated, “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.”

Ojulari also addressed the high cost of oil production in Nigeria, noting that operating costs range between $25 and $30 per barrel.

He partly attributed this to substantial spending on pipeline security, stating, “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.”

He expressed belief that these costs would decrease with time and stability.

Despite these challenges, Ojulari affirmed that NNPC Ltd. aims to increase Nigeria’s oil output to 1.9 million barrels per day by the end of the year.