A Review of the Nigerian Energy Industry

We saved $287m in Port Harcourt Refinery TAM – Kachikwu

03 September 2015, Abuja – The Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC), Dr. Emmanuel Ibe Kachikwu, has said Nigeria has saved over $287 million from the turnaround maintenance (TAM) of the Port Harcourt Refinery, Eleme.

Port Harcourt refinery
Port Harcourt refinery

Kachikwu made the disclosure shortly after an inspection tour of the refinery ON Wednesday.

He said foreign companies had requested to carry out the TAM at a cost of $297 million but the NNPC used its manpower and local oil servicing firms to achieve the maintenance at the cost of less than $10 million.

He said: “The asking price by the original refinery builder was $297 million. The disaster with that was that they were not professionals and they were not ready to give us guarantees. What we have done so far is under $10 million.

“Obviously, had we consistently done this overtime, we would not have the sort of nightmare that we have had today. Whatever it takes, we are going to raise money; we are going to raise some vessels to give them what they need to run this place and run it efficiently.”

He said he was not ready to apportion blames for the failure to carry out TAM on the refinery for 25 years, but stressed that he was looking forward to getting solution for the nation’s oil industry.

He expressed the desire of the federal government to ensure that the nation’s refineries operate at their optimum capacity, insisting that the nation would continue to import refined products as the refineries cannot meet local demand even if they work at their installed capacities.

“We said that we like to tie the delivery of crude to the refinery to make sure the FCC (Fluid Catalytic Cracking) Unit work, otherwise, we will be wasting very vital resource. Kaduna like you know came up and we had a little bit of hiccups yesterday, but it is still being worked on and it should come back on stream quickly. Port Harcourt is getting ready to get their FCC powered.

“We’ve got to realise that these are refineries that have not been given serious maintenance for over 15 to 18 years and what I saw today was quite amazing with a lot of energy from people who are locally based here doing their best to find an alternative solution.

“Otherwise, there would have been a very long gestation period in ordering parts for these refineries. What is important is that people are motivated and energised; they are focussed. They understand my timelines that we need to get these things to work; we need to support them whichever way we can.

“I am impressed with the energy and the effort that is going on there; I am impressed with the momentum. I think that if we continue on this part, we should see the refineries working near full blast very soon. Until then, we are going to manage our resources, how we deliver crude and what we need to do in terms of reducing contractual times to enable them get the parts they need to get the refineries working. I am happy with what I saw today; we still have some ways to go, but we are on the right part,” he said.

On the timeline for the refineries to go full blast, Kachikwu said: “From what I see, within the next 60 days, we should at least get two out of the three FCCs working. There are still some components that need to be tinkered with here and there and there would be stoppages while you are doing that? Certainly.

“But in a full capacity, they will be doing something like 16 million to 20 million litres of PMS. Our national consumption is within the range of between 30 million and 40 million litres; still to be determined. In their 40 per cent to 50 per cent capacity, we are probably looking at half of that. So, we will always continue to import some element of that.

“If we continue on this chain and if I can get them every month to have incremental values; we get at six, then we get at eight, then we get at 10, and set ourselves a 90-day spectrum to see where we are, that will be progress. Anything that I produce locally and don’t have to import is a plus.”

He ruled out any plan by the federal government to sell off the refineries, stating that instead, government might consider joint ventures.

“There will never be a plan to sell the refineries. There might be a plan to have joint venture investors, but that is going to depend on how the refineries are going to work on their own. Obviously, we are going to be looking at all options to make the refineries 100 per cent efficient,” he said.

In terms of crude supply, he said: “You know we have cancelled the crude supply by vessel contracts. We are going to use some stop-gap measures to use our own internal supplies from now till when the new contracts are looked at.

“The intent is to have the pipelines work. I am very focused on the pipelines; it is no longer good enough excuse that people are sabotaging the pipelines. We have got to deal with those sabotages and we are going to go extremely tough on this.

“If we can make the pipelines work, we get crude supply and get higher volumes easier. We are on the verge of bringing in army corps of engineers to help with pipeline protection. We should be looking at both aerial surveys by helicopters, surveys by the military and obviously naval surveys as long as we can.

“But we have to also engage the communities because at the end of the day, how all these we have planned are going to be functional will depend on how well we relate with the communities. Should the pipelines work, there is no alternative to it.”


– – This Day

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