August 4, 2015

Nigeria refineries low on Petrol production

Don urges FG to resuscitate refineries

By Clara Nwachukwu

Current data on refineries production in Nigeria indicate that more heavy or fuel oils (low and high fuel oil/black oil) are being produced from the four refineries than other high demand products like premium motor spirit, PMS, otherwise known as petrol.  The revelation comes despite assurances by the Nigerian National Petroleum Corporation, NNPC, which said last week that two of its refineries were working between 60 and 80 percent of their installed capacities.



NNPC had promised that the four refineries would be re-streamed by July end, when the turn around maintenance, TAM, of the hitherto almost comatose refineries would have been rounding up, thus, buoying high hopes for imminent relief from products scarcity in the country.

Capacity utilisation

However, status of the refineries operations as at July 31, 2015, exclusively obtained by Sweetcrude, indicate that the refineries cannot still meet the daily consumption requirement of between 40 and 42 million litres/day for petrol. For now, the Port Harcourt Refining Company, PHRC 2, is only able to produce about 39million litres of petrol, i.e. 38,906 x 1000 = 38.906 million compared with fuel oil, which is in low demand of about 49 million litres.

This is because aside from the PHRC 2, the fluid cracking catalytic units, FCCUs of the other refineries are still under rehabilitation. But succour is expected from the Warri Refining and Petrochemical Company, WRPC, once its FCCU has been fully rehabilitated, to produce additional 30 million plus litres, while capacity utilisation in the Kaduna Refining and Petrochemical Company, KRPC, remains nil.

KPRC only produces automotive gas oil, AGO, also known as diesel, and dual purpose kerosene, DPK, which can be used as both aviation fuel/Jet-A1 and household kerosene, HHK   Nigeria has four refineries with combined capacity of 445,000 barrels per day, bpd, comprising: PHRC 1 – 150,000bpd; PHRC 2 – 60,000bpd; KRPC – 110,000bpd; and WRPC 125,000bpd.

But current status data put the Crude Distillation Unit, CDU,capacity utilisation in the four refineries as, PHRC 2 re-streamed on July 20th -60.40 percent; PHRC 1 under rehab – nil; KPRC re-streamed July 30th – 64.4 percent; and WRPC – 62 percent.

Broken further production outputsfrom the refineries are shown in the table above:

Explanatory notes:

Catalytic Reforming Unit (CRU)

Naphtha Hydro-treating Unit (NHU)

Vapor Recovery Unit (VRU)

Gas Processing Unit (GPU)

NNPC pronouncements

But on July 29th the NNPC declared that “the Port Harcourt and Warri refineries have been successfully re-streamed after a nine-month phased rehabilitation exercise conducted by its in-house engineers and technicians.” The Corporation in a statement revealed that both plants had commenced preliminary production of petroleum products after successful test-runs.

It added that while PHRC is ramping up its operation to about 60 percent of its 210, 000 barrels per day name plate capacity, while WRPC production is projected to hit 80 percent of its installed 125, 000 bpd capacity, even as the FCCUs have not been re-streamed. The NNPC further said the Port Harcourt Refinery is projected to boost the nation’s local refining capacity with a product yield of 5million litres of petrol per day while Warri Refinery would contribute 3.5 million litres of petrol to local refining capacity.

It is uncertain whether these outputs are based on actual or projected efficiencies since the FCCUs in the two refineries are still down and contrasts sharply with the production data already provided.

FCC challenges

However, the NNPC spokesman, Mr. OhiAlegbe, who issued the statement on the refineries capacity utilisation did not speak about the type of products churned out or of FCCU challenges, without which the refineries cannot function effectively. But a top management source of the Pipelines and Products Marketing Company, PPMC, the Corporation’s marketing arm which evacuates products from the refineries, noted that the effectiveness of the FCCU determines the type and quantity of products produced.

He told Sweetcrude in confidence: “That the refinery is not producing enough PMS for the market does not mean the refinery is not working. What it simply means is that the refinery is churning out more fuel oil, which is the residue from crude, and which is not in high demand in Nigeria.

“What is responsible for this state is the efficiency of the FCCU. If the FCCU is working, we will get higher yield of other products like PMS and lesser fuel oil whether low or high, and vice versa. So it means that the more efficient the FCCU, the better the refinery output.”

He however noted that the efficiency of the refinery is not static, as you will get different performance efficiency depending on the effectiveness of the FCCU.

Refinery TAM

The turnaround maintenance for the refineries were abandoned for decades, but since the democratic dispensation in 1999, successive governments have tried to overhaul the refineries to make them more efficient without success because of their long years of abandonments, even as fuel needs increased daily.

Later on, the TAM assumed political overtones, as rehabilitation contracts were awarded to friends of the government, which did not improve the status of the refineries until the process was given up entirely in favour of products importation.  Importation meant more “jobs for the boys” who metamorphosed into “cartels”, living large, due tothe corruption associated with the management of the subsidy regime, at the expense of other Nigerians that have to queue for hours to get fuel products.

It was therefore with great expectations that at the twilight of former President Goodluck Jonathan’s administration, Nigerians received the news that all the refineries will undergo the required maintenance using local contractors, to reduce costs from using the original equipment manufacturers, OEMs.

A refinery

A refinery


The NNPC has been very evasive on the type of TAM being carried out, or the contractors handling the projects. The closest information on this was given by the Managing Director, KPRC, Mr. Saidu Mohammed, who told Sweetcrude that what was happening in the refineries was a TAM-rehabilitation, without giving further details on the contractors handling them.

He said: “We are doing TAM (Turn Around Maintenance)-Rehabilitation (TAM-Rehab) while the refinery is running. We try as much as possible not to shut down the entire refinery while this is going on.” Disclosing that the KPRC rehab will last till March 2016, after 18 months process, Mohammed however expressed confidence in the capacity of the local contractors to execute the jobs.

According to him, “We are using purely Nigerian contractors. Nigerian engineering contractors are very competent; sadly many people don’t know that. They have the competence and the capacity to do jobs. They can do everything on this refinery.”

Providing insight into the rehabilitation exercise, the NNPC in its statement said it had to adopt the phased rehabilitation strategy after the Original Refinery Builders (ORB) who were initially contacted for the project came up with unfavorable terms.

“Though a decision was taken in 2011 to rehabilitate all the refineries using the ORB of each of the refineries, we were impelled to switch strategy after the ORBs declined participation and nominated some partners in their stead who came up with outrageously unfavorable terms.

“The nominated partners, as sole-bidders came up with humongous price offers after two years of thorough and exhaustive scope of work definition and price negotiations. The proxies were also unwilling to provide post rehabilitation performance guarantees.

“The phased rehabilitation strategy which entailed phased and simultaneous rehabilitation of all the refineries using in-house and locally available resources in line with the spirit and letter of the Nigerian Content Law, also involved the use of Original Equipment Manufacturer representatives to effect major equipment overhaul and rehabilitation.”

The Corporation also claimed that the phased rehabilitation programme which started in October 2014, after the required funding stream was established created a 70 percent reduction in costs without giving full details. The Corporation said that with the successful re-streaming of the PHRC and WRPC, attention has now moved to the Kaduna Refinery, which is billed to come on stream soon.