– To deliver 30,000bpd from old plant
– Experts say plant not ready, only mechanical completion achieved
CHUKS ISIWU & MKPOIKANA UDOMA
Lagos/Port Harcourt — The Nigerian National Petroleum Corporation Limited, NNPC, says Nigerians will soon heave a sigh of relief over fuel scarcity and price hike orchestrated by over-dependence on imported fuel, as rehabilitation work at the Port Harcourt Refinery is ongoing day and night for the plant to commence operations by the end of this month. It insists the December 31 deadline for the plant’s commencement of operations would be achieved
Some industry experts, however, argue that the plant would unlikely be ready to commence crude oil refining by the end of the month as it may have only achieved mechanical completion and had not undergone commissioning and testing necessary for commencement of full operations.
The Port Harcourt Refining Company, a subsidiary of NNPC Ltd, has two refineries – an old refinery built in 1965 with capacity to refine 60,000 barrels of crude oil per day, and the new refinery built in 1989 with capacity to refine 150,000 barrels of crude oil per day.
According to industry watchers, the old refinery has not produced since the new refinery came on stream in 1989, while the new refinery which once operated at 100 percent installed capacity between 1991 and 1992, has not refined a drop of oil since 2012.
The Engineering, Procurement and Construction, EPC, contract for the rehabilitation work at the Port Harcourt Refining Company was awarded by former President Muhammadu Buhari-led government in March 2021 to Italy’s Tecnimont S.p.A, a subsidiary of Maire Tecnimont Group, at the contract sum of $1.5 billion.
According to the contract documents, the project entails engineering, procurement and construction activities for a full rehabilitation of the two refineries in Port Harcourt, aimed at restoring the complex to a minimum of 90 percent of its nameplate capacity of 210,000 barrels per day, to be delivered in phases from 24 and 32 months and the final stage expected to be completed in 44 months from the award date.
However, former Minister of State for Petroleum Resources, Chief Timipre Sylva, who was a signatory to the contract on behalf of the Federal Government, had assured Nigerians that the refinery will commence operations in 18 months from the award date.
While 35 months have elapsed since the contract was awarded in March 2021, the government has kept shifting the goal post since the last quarter of 2022 and later postponed commencement of the refinery’s operations to December 2023, even when the contractors, Tecnimont, has been mum about the readiness of the project by end of 2023.
Port Harcourt refinery will be ready by 2023 ending
The incumbent Managing Director of the Port Harcourt Refining Company, PHRC, Engr. Ibrahim Onoja, has insisted that the old Port Harcourt refinery will be ready by the end of December 2023, while keeping mum on the deadline for the new refinery.
Onoja disclosed that the rehabilitated old Port Harcourt Refinery would be refining 30,000 barrels per day of crude when it returns, which is half of its original installed capacity.
According to him, though the old refinery was built in 1965, it has the latest instrumentation technology and over 75 percent of the rehabilitation task has been completed.
The Port Harcourt Refinery boss explained that COVID19 of 2020 also contributed to the delay in the revamp of the refinery, as the contract was awarded in early 2021, amid a lot of shut down of industries around the world due to the pandemic, including Original Equipment Manufacturers, OEM in Europe and Asia.
“The refinery is coming back to compete and operate optimally. What is left from 1965 is just the metal frame and the static equipment, every other instruments and equipment have been rehabilitated over the years with latest refining technology.
“The old refinery will be ready by December 2023. OEMs (Original equipment manufacturers) in China and Europe were shut down even into early 2021. And then, when we were coming out from COVID, the Russia vs Ukraine war struck leading to sanctions against Russia and its allies. Remember, this plant operates with smart technology which also is the technology in the manufacturing of weapons of war.
“With all these setbacks, we were still able to get back on track and we are now ready to deliver the old refinery by end of the year. We imported a lot of equipment and these equipment will serve us for many generations to come.”
New refinery should have been a priority
Commenting on the development, a former Managing Director of Kaduna Refinery and the Port Harcourt Refinery, Engr. Alex Ogedengbe, said the new refinery, which according to him has many conversion units and bigger capacity, should have been given a priority over the old refinery.
Ogedengbe wondered why the federal government kept reeling out deadlines on the refinery, instead of allowing the EPC contractor, Technimont, to do the talking, adding that the December 2023 deadline was not feasible as only mechanical completion can be achieved by then.
He said: “The old refinery has not operated since 1990 when the new refinery came on. The old refinery has just one conversion unit that can produce PMS (Premium Motor Spirit or petrol), while the new one has four conversion units. If you put in one barrel of crude oil in the old refinery, you will get 24 percent of PMS; but in the new refinery, you will get up to 50 percent of PMS.
“Now the question is, why are they rehabilitating the old one which has obsolete technology and not the new one which has bigger capacity to produce PMS? The old refinery does not have all the conversion units and processes that the newer one has.
“I am thinking that the government just wanted to quick fix with the old refinery, while marking time for Dangote refinery to come on stream and relieve them. As a matter of fact, the builders of the new refinery refused to take part in the ongoing rehabilitation of the Port Harcourt refinery because what they (government and NNPC) are doing is wrong.
“There is no justification for the state of our refineries. The four refineries were built with world class technology, but the problem is that they were not running commercially, and profit oriented, Money for their maintenance were not released on time, so their capacity kept declining until they all crashed in 2018.
“The Federal Government keeps giving us deadlines. Why can’t we hear from the contractor? From what I have seen from the clips released by NNPC, they are reconstructing the old refinery and replacing new pipes and equipment. They are not expanding it and that means the capacity will remain the same.
“The new refinery should have been rehabilitated first before the old one, because that is the only way to produce products in a commercial quantity. Even the December completion deadline is not feasible, they may achieve mechanical completion but testing the conversion units may take another one month. What I am saying is that the job they are doing in the old refinery should have been done in the new refinery.”
Mechanical completion
For his part, an expert and former Managing Director of both the Kaduna Refinery and Warri Refinery, Engr. Babajide Soyode, alluded to the fact of the old Port Harcourt achieving only mechanical completion. He said even after mechanical completion, a lot of commissioning and testing have to be done before actual production, in order to eliminate any form of error.
“Mechanical completion is different from when you start getting products. You have to do pre-commissioning and commissioning before actual production. Rehabilitation is like building a new refinery and a refinery is a highly inflammable machine, therefore error cannot be made.” He emphasised that a mechanically completed old Port Harcourt refinery must have to undergo pre-commissioning and commissioning to be certified safe and fit for operations.
Dr Ayodele Oni, an energy law and policy export, who spoke on when fuel will possibly flow from the rehabilated Port Harcourt Refinery, referred to the same issue of the plant achieving only mechanical completion, said: “I think March (2024), because, with what I see in the videos they are showing and the conversations I hear in the press, it looks like it’s mechanical completion that they may finish in December. You do commissioning and testing (after mechanical completion) and that will take a few weeks, or a few months.”
New refinery will be ready by mid-2024
Meanwhile, the Independent Petroleum Marketers Association of Nigeria, IPMAN, says based on the work progress on ground, the old Port Harcourt refinery will be ready by the end of 2023, while the new refinery will be ready by mid 2024.
IPMAN, which has an oversight function of monitoring the ongoing rehabilitation of the Port Harcourt refinery, said a commissioning committee has been set up, as pre-commissioning activities will begin in the refinery any moment from now.
IPMAN Chairman in Rivers State, Dr. Joseph Obele told SweetcrudeReports exclusively that all the equipment required to revamp the two refineries in Port Harcourt were on ground. However, he said until all the nation’s four refineries were operational, the country will continue to import PMS.
He said: “With the progress of work I have seen so far, the old refinery will be completed in the first week of January 2024 or last week of December 2023. As I speak, the a commissioning committee has been set up.
“As you know, we (IPMAN ) have an oversight function of monitoring the ongoing rehabilitation of the Port Harcourt, and I was at the refinery yesterday, I can assure you that tgr new refinery will commence operations by mid-2024.
“However, even with the combine capacity of both the old and new refineries in Port Harcourt, we will still import PMS because these two refineries can only give us 27million litres per day, whereas our consumption capacity in the country is 60million litres per day. We will only stop importing fuel when Warri and Kaduna refineries come on stream, then we will have a combined capacity of 84million litres per day and we will even have surplus for export.
“Warri Refinery will come on stream in mid 2024 and Kaduna refinery in early 2025. All equipment are on ground, the only barrier to the rehabilitation would have been availability of equipment, but as we speak everything is on ground and President Bola Tinubu is committed to fixing the refineries.”
We’ll hold NNPC responsible for December deadline – Lokpobiri
Meanwhile, ahead of the planned resumption of production at the Port Harcourt Refining Company, the federal government says it will hold NNPC Ltd responsible for the timeline announced to Nigerians.
The government had in August announced that the Port Harcourt refinery will commence operations in December 2023, while rehabilitation works were in top gear to ensure that both Warri and Kaduna refineries resume operations by end of 2024.
Speaking while inspecting the 5,000bpd capacity WalterSmith Petroman Refinery in Ibigwe, Ohaji/Egbema Local Government Area of Imo State, the Minister of State for Petroleum Resources, Oil, Sen. Heineken Lokpobiri, said he made the announcement of December 2023, following the presentation made to him by the management team of NNPC Ltd.
Lokpobiri said the ongoing rehabilitation of the nation’s four refineries was not directly under his purview, but that of NNPC Ltd.
On the feasibility of Port Harcourt refinery to resume operations in December, the Minister called on Nigerians to exercise patience, as he was already pushing for the timelines announced by the nation-owned oil company.
He said: “You know I have been in the office for just three months, the NNPC team told me that the Port Harcourt refinery will be ready by December, I went there I saw that they are working and they are still working. I was meant to be there in the next few days but I have rescheduled it because I’m not going to be around, as I will be going for OPEC, when I come back I am going to be there.
“But there are three phases in the Port Harcourt refinery. The phase one, which is Area V, from the presentation made to me, I am going to hold them (NNPC Ltd) accountable for the dates which they have given Nigerians. They told me the first phase will be ready by December; few weeks ago I actually met with them and they said the first phase will be ready by December, so let us wait till December when the fuel start coming up everybody will see it.
“I want to make it very clear that I am not the one who is rehabilitating the refineries. The NNPC, which is the national oil company is the body responsible for the rehabilitation of the refinery even before I came, and I’m pushing them because of the importance of refineries in the country to ensure that they meet the timelines.”
“Let’s have the first phase working, then the second and the third phase will work at the end of next year and that is what they are doing. And I am holding them accountable. I am holding them responsible for these timelines they have said. So, if you asked how possible the dates are, I’m not the one responsible, I can only tell you that work is ongoing. We are still holding them for those dates that they have given.”
