By Stephen Ubanna
Abba Kolo Kyari, Group Managing Director, GMD, Nigerian National Petroleum Corporation, NNPC, who energy experts described as working round the clock to fix the nation’s dilapidated refineries to operate at optimal capacities, appears to have sent a signal to the 34 indigenous and foreign oil traders which won the award for the highly sought after contracts to exchange crude oil for imported fuel that the deal would be over by 2022. This is because the Corporation has begun moves to rehabilitate the country’s three dysfunctional refineries with a refining Capacity of 445, 000 barrels of crude oil per day which may no longer give room for fuel importations.
As a prelude to the rehabilitation of the ailing refineries, which had been working in bits and fits over years, Kachukwu Ibe, a former minister of State, ministry of Petroleum Resources, had revealed last March that NNPC has already hired Italy’s Maire Technimont to handle the rehabilitation of the Port Harcourt Refining and Petrochemical plant at the first instance. The Corporation was said to have awarded the contract to the Italian firm at the sum of $50 million to carry out the checks and equipment inspections for the plant in readiness for the rehabilitation work.
Recall that Mainkanti Baru, an Engineer, and a former GMD, of NNPC, had earlier made Nigerians to believe that the Port Harcourt refinery work would last for six months starting from the month of March, 2019, an indication it ought to have started optimal production between now and October inorder to reduce the cost of importation of petroleum products into the country.
The assurance by Baru, the former GMD of NNPC, about plans to re-stream the Port Harcourt plant and other broken down refineries may have given Ibe, then minister of State, Petroleum Resources, hope, that it would save the country millions of dollar in fuel imports. The last time, the Port-Harcourt plant was said to have been rehabilitated was about 19 years ago under former President Olusegun Obasanjo but that was how far he could go until he left office on May 29, 2007.
The country’s past experience with the Offshore Processing Arrangement, OPA, initiated by then President Goodluck Jonathan Administration in 2015 to supply petroleum products in the country may have exposed the high level of corruption involved in the Oil SWAP deal as the country crude oil was Comercially undervalued. The Nigerian Extractive Industries Transparency Initiative, NETTI, in one of its reports had revealed that the nation lost over $723 million or N221.5 billion through the OPA.
The Value News findings show that the Corporation under the former Management led Baru , had entered into discussions with different consortiums to rehabilitate its dilapidated refineries which it had agreed to pay the contractors through off take of refined petroleum products rather than cash.
Investigation shows that the completion of the overhaul of the Port Harcourt plant would be quickly followed with the rehabilitation of that of Warri Refining and Petrochemical plant while the Kaduna refinery, in the north west geopolitical region would be last to undergo the rehabilitation exercise .
Indeed, many had expected that Ibe and Baru, the former NNPC boss , who intiated the rehabilitation exercise would be given the opportunity to see it to the end but the katsina state born Nigerian born President thinks differently. He has rejig his Cabinet for his second term in office which had introduced fresh hands including Timipre Silver, a former governor of Bayelsa state, as the new minister of State, Petroleum Resources while he retains his positions as the senior minister of the ministry.
Until, Ibe ,was dropped as a minister of state, in the ministry of Petroleum Resources, he and Baru, the former GMD, of NNPC, who retired after 35 years in the service , last July, had failed to tell Nigerians, the state of the Port Harcourt project, let alone , when work would start on the Warri or Kaduna refineries.
But barely, two months in office, Kyari, who recently embarked on a facility tour of the Port Harcourt plant, had reassured Nigerians that the refineries , located in Port Harcourt, Warri and Kaduna, would resume full production in 2022 which analysts described as NNPC old song. His optimism was said to have been based on the feelers received from the Contractors that that the full rehabilitation of the plants would commence on January , 2020.
Ndu Ughamadu, Group General Manager, Public Affairs Department, PAD, says the ’’strong determination and Commitment of the Corporation’s GMD, to restore the nation’s ailing refineries back to life in order to deliver ‘’ real time value and address the petroleum products needs of Nigerians’’ is unequalled in the Corporation history, nothing that there was no cause for alarm.
Kyari was said to have made it clear to those cares to listen that ‘’ making the refineries to operate at optimal capacities was a Presidential mandate that the Corporation would leave no stone unturned to actualise’’, stressing that a ‘’timely delivery of the public asset was one of his top priorities as the GMD, of NNPC.
Aware that Nigerians would hold him by his word if he fails to deliver on the project by 2022, he has vowed to close out all the necessary conditions that may forestall the delivery of the rehabilitation exercise as planned. The good news was that the Corporation is getting all the necessary financial support from the current Administration of Buhari, , the workforce and the contractors: Technimont and the project consulting Company, ENI/NAOC, which had been very encouraging.
The presentation of La Mattina Carmelo, Technimont project Manager, on the progress of work at the Port-Harcourt plant during his visit t the plant speaks volume. Carmelo had said that the Inspection aspect of the project was over 90% while the final report and the EPC proposal has reached 75%.
The technimont project manager was said to have told the NNPC team led by the GMD at the Port Harcourt refinery that it would deliver on the first phase of the rehabilitation work within three weeks from the time of the visit. Daniele Tamburini, the Project Manager of ENI and NAOC, the Consulting firm, who could not his feelings, confirmed that Technimont, had complied so far, with the global standard of refinery rehabilitation.
He maintains that there no cause to worry about the PortHarcourt project as his Company was ready to receive the full report of the scooping for final assessment and support for the Corporation to deliver the project as promised Nigerians, Technimont, ENI and NAOC, were the original builders of the Port Harcourt refinery.
Perhaps to ensure that the nation’s refineries would no longer face the current technical problem in the future that would warrant the engagement of original Contractors to revamp the plants, instead of the indigenous Engineers taking over the job, Kyari has given a matching order to the indigenous workforce and other professionals working in the refineries to ensure that they were fully engaged by the Contractors to participate actively during the rehabilitation exercise.
This may have informed why the NNPC GMD advised the Indigenous Engineers working on the project along side the Technimont Engineers ,to ensure they participate actively participate in the rehabilitation of the refineries meant to facilitate capacity building in the nation’s oil and facilitate gas Industry as well as reduce cost of hiring foreign Contractors to rehabilitate the refineries whenever technical problem arises.
‘’This is the only way the country could enjoy an uninterrupted production curve that will grow the oil and gas sector of the economy’’, he had said. The indigenous Engineers may have taken it as a challenge as they were said to be giving the Technimont , ENI and NAOC Engineers a close marking on the job as they have refused to play role of job boys, giving Nigerians hope that the NNPC workforce may soon take over the responsibility of the repairs or the rehabilitation of the refineries when the need arises , without waiting for the Engineers from Technimont or ENI and NAOC to arrive to fix broken down equipment in the course of production.. This is a cheering news to Kyari and his Management team.
In a related development, Ughamadu, a General Manager and the Corporation Spokesperson had said that it has signed about $876 million deal with Shell Petroleum Development Company, SPDC, for the funding and alternative financing of Nigerian Petroleum Development Company, NPDC, a subsidiary of NNPC, operated OML65.
An elated Umar jiya, NNPC, Chief Financial officer, who signed for the Corporation , disclosed that the package entailed a Comprehensive financing solution that would address the complex issues involved in growing NPDC production over the years. Giving his expertise, he disclosed ‘’ it would help minimize its cost of capital and maximize its value preservation’’.
He listed the gains of the deal to NPDC, to include drilling and completion services of the oil Well, building capacity and technology transfer, as well as generating employment opportunities for the teeming unemployed Youths in the country.
More importantly, he said , it would also struck a balance between risk and reward which would the investors a rate of return that would be commensurate with their funding of the brownfield project which, Geologists said had significant exploration risk.
The project according to sources was expected to ramp up NPDC Production at the OML65 from 900 barrels per day to 60,000 barrels per day with average production over field life at about 40,000 barrels per day, an indication of more money for the Company.