The Nigerian National Petroleum Corporation (NNPC) has said that talks had begun for its acquisition of 20 per cent equity stake in Dangote Refinery.
NNPC’s chief operating officer, refining and petrochemicals, Mr. Mustapha Yakubu, disclosed this yesterday at the end of a two-day Nigeria Oil and Gas Opportunity Fair (NOGOF), 2021 conference tagged: ‘Leveraging opportunities and synergies for post pandemic recovery of the Nigerian oil and gas industry.’
The 650,000 barrels per day (bpd) integrated refinery expected to process a variety of light and medium grades of crude, including petrol and diesel as well as jet fuel and polypropylene, is owned by Nigeria’s Dangote Group and is worth about $15 billion.
Yakubu said the collaboration will further ensure uninterrupted product supply to Nigerians when the deal is sealed.
Yakubu further stated that one of its divisions, Greenfield Refining Projects Division (GRPD) was handling the negotiations.
“We have what we call the green field refinery and the Greenfield Refining Projects Division (GRPD) of the NNPC. What we do, our strategy is to collaborate and seek strategic partnerships with private investors.
“At the moment, we have Dangote Refinery, which is the 650,000 capacity barrels per day plus a mini 80,000 tonnes per annum petrochemical plant.
“What are we doing there? I can tell you today that we are seeking to have a 20 per cent minority stake in Dangote Refinery as part of our collaboration and you know that there’s a huge quantity of crude for that refinery.
“That’s 650,000 barrels, going into a single crude distillation unit (CDU).
When that comes on board, it will also wet the nation for us.”
According to him, the corporation is also interested in partnering with the African Refinery in Port Harcourt, a co-location facility, the CNCEC Chinese group, which is interested in building two refineries in Nigeria, the Waltersmith modular plant, in addition to collaborating with Azikel refineries on condensate production.
Yakubu also said notwithstanding the global push for renewable energy, Nigeria has a local, domestic and regional market for hydrocarbons.
He added that Africa will continue to rely on fossil fuels at least in the next 20 years.
He said Nigeria would not fold its arms and do nothing with its hydrocarbons just because the International Energy Agency (IEA) has predicted a net-zero emissions scenario by 2050.
“Today, when you are bringing products into Nigeria, they disappear to neighbouring countries. There’s nowhere in countries around Nigeria that they sell fuel for less than N400 per litre. So, there’s a market,” he added.
Commenting on Nigeria’s moribund refineries, Yakubu said there was a deliberate effort to power the refineries down because of the need to do a full rehabilitation beyond the regular turnaround maintenance.
“We believe the only way to do that is to power them down to reduce some of the cost. We have heard that we are spending so much money on the refineries, yet they are idle.
“Of course, there are costs associated with idle refineries; we have staff salaries and remuneration and then the power plant utility operations. And also we need to maintain the plants in terms of preservation and lost investments because they are assets that we believe can be brought to life,” he said.
He said the NNPC was exiting the running of the country’s four refineries, and it has recently called for bids from competent and qualified contractors for that purpose.
Yakubu explained that NNPC was not in the best position to run the refineries and has opted for a new model, the Operation and Maintenance (O&M) for the running of the facilities.
He added that it is important to bring in O&M professionals, especially given the fact that as an engineer in the NNPC, no matter how competent, the employee must exit when they hit 60 years of age.
Yakubu further said expression of interest for organisations that would run the refineries was already out and many people had been evaluated.
He expressed optimism that the NNPC will choose the best contractors to handle the project.
According to him, it had become more difficult to get local lenders to finance fossil fuel businesses because of the renewable energy drive, adding that the NNPC is also looking for investors for the rehabilitation of its pipelines because they remain the best way to transport products from refineries to depots.
