The Port Harcourt Refinery commenced operations and its first truck-out of petroleum products on Nov. 26, 2024, in view of the re-streaming of the rehabilitated facility.
The refinery is managed by the Nigerian National Petroleum Company Limited (NNPC Ltd.) through the Port Harcourt Refining Company Limited (PHRC).
The truck-out signaled the commencement of crude oil processing from the plant and delivery of petroleum products to the market after years of dependence on imported products after government owned refineries became moribund.
Located at Alesa Eleme area of the garden city, with refining capacity of 210,000 barrels per day (bpd), the refinery comprises two operational units which were established in 1965 and 1989.
The rehabilitated old refinery is currently operating at 90 per cent of its installed 60,000 bpd capacity, refining Premium Motor Spirit (PMS), known as petrol, Household Kerosene (HHK), Automotive Gas Oil (AGO), known as diesel, among others.
The resumption of the refinery after it had achieved its mechanical completion and flare start-up in 2023, followed scepticism and criticisms from some critics.
Some stakeholders, like oil marketers and the society of engineers, had also toured the refinery and confirmed its functionality.
On Sept. 15, the 650,000-bpd capacity Dangote refinery, which commenced operation in 2023, began the supply of PMS from its gantries to marketers, with many agreements signed with marketers for supply consistency and affordability.
On Dec. 30, the Warri Refining and Petrochemicals Company (WRPC) in Delta, managed by the NNPC Ltd., also commenced operations after years of being moribund.
The 125,000 bpd Warri refinery, which was commissioned in 1978, had been shut down for rehabilitation in 2021 with Daewoo Engineering as the EPC contractor.
The refinery, which is currently operating at 60 per cent of installed capacity, resumed operations after the NNPC Ltd. restarted the 60,000-bpd old Port Harcourt refinery in November.
It is currently processing 75,000 bpd, which translates to 60 per cent of installed capacity, and produces 2.9 million litres of diesel, 1.9 million litres of kerosene and 4.9 million litres of fuel oil.
The production of PMS, according to the NNPC Ltd., will follow in the days ahead as other units of the refinery come on stream.
The coming on board of the refineries had spurred competition in the deregulated sector, and Nigerians expect the price of petroleum products coming down considerably as a result of this.
Recently, Dangote refinery reduced the ex-depot price of PMS from N970 per litre to N899.50 per litre.
The refinery signed a partnership with MRS Oil Nigeria Plc to sell at N935 per litre nationwide; while the NNPC Ltd. announced reduction in its ex-depot price from N1,020 per litre to N899 per litre.
This move, which had stimulated downstream sector competition, and aimed at responding to the competitive dynamics and impacts of deregulation, was also lauded by the oil marketers and experts.
Meanwhile, some stakeholders have urged the Federal Government to privatise the state-owned refineries, including the Warri and Kaduna refineries, as part of its broader reforms to enhance transparency, competition, and operational efficiency in the downstream petroleum sector.
The presidency had, in 2024, announced plans for the complete privatisation of the state-owned refineries for local oil refining and production to peak steadily.
Dr Maurice Ibe, an Oil and Gas Industry Consultant, said that the privatisation of the refineries would enhance the efficient operation of the refineries, promote healthy competition and create a level playing field in the industry.
Ibe, a Consultant to the Independent Petroleum Marketers Association of Nigeria (IPMAN), said that the NNPC Ltd. had clearly demonstrated lack of capacity to efficiently run and maintain the refineries.
According to him, placing the refineries in private hands will greatly improve the productivity of Nigeria’s oil economy.
He said that without effective and functional refining system, Nigerians would never see a reasonable drop in petroleum prices soon.
“Though the Port Harcourt Refinery is functional, it is not producing at full capacity to have the level of impact that it should have on pump prices.
“Until the Port Harcourt, Warri and Kaduna refineries start working optimally and producing at full capacity for independent marketers to load, the country will still be dependent on Dangote refinery,” he said.
While highlighting some basic parameters for measuring the functionality of refineries, he said that a functional refinery must have the capacity to load at least 200 trucks of 50,000 litres of petrol daily.
“Irrespective of what the NNPC Ltd. and dignitaries are saying concerning the refinery, the fact remains that the basic yardstick to measure the success or productivity of the state-owned refineries is still lacking.
“There have been loading from the refinery but it has not loaded more than 10 trucks daily since it resumed. I have my members on ground.
“No matter what it loads, if the IPMAN has not started loading, you can not make an impact nationwide,’’ he said.
An Economist, Dr Chijioke Ekechukwu, said that the coming on stream of more functional refineries in the country was expected to crash the prices of petroleum products.
Ekechukwu said that there would be free market economy with more innovations.
“Free market economy means that there should be free entry and free exit. It also brings competition and prices of goods and services lower.
“With the Dangote, Port Harcourt Warri, and other modular refineries coming on stream, we are better for it as a country and as an economy.
“The Gross Domestic Product (GDP) will also be enhanced, while more employments would be created,” he said.
Dr Billy Gillis-Harry, National President, Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), advocated for the privatisation of government-owned refineries to reputable private companies.
Gillis-Harry said that such a move would improve efficiency and reduce government expenditure.
He said that it would foster a competitive market and encourage new entrants to eliminate monopolies, ensure fair pricing, and enhance regulatory compliance through a robust monitoring framework.
He called for the establishment of a robust monitoring and evaluation framework to track the performance of downstream operators and ensure compliance with regulatory requirements.
“There should be continuous investment in critical infrastructure and preventive maintenance, such as refineries, pipelines, and storage facilities, to improve the country’s refining capacity and reduce reliance on imported petroleum products.
“Development of local content by supporting indigenous companies and providing incentives for research and development in the downstream sector should be encouraged.
“Private sector participation should be encouraged to increase access to funding and expertise. Regulatory frameworks should be reviewed to reduce operational costs and attract investment,” he said.
To boost Nigeria’s refining capacity and reduce reliance on imported petroleum products, he recommended that crude oil should be made available for local refineries.
Speaking on the downstream competition, he said that the prices of the Dangote Refinery were initially competitive, putting pressure on the NNPC Limited to review its pricing strategy.
According to him, this competition will ultimately benefited consumers, who enjoyed relatively stable and lower prices for petroleum products.
By Emmanuella Anokam, News Agency of Nigeria (NAN)
