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Back on track? The oil refineries resume production

20 September 2015, 08:29

Port Harcourt - Bright orange flames flare upwards from a pencil-thin chimney at the Port Harcourt Refining Company, sending thick black smoke into the white clouds above the southern oil hub.

On the ground, workers in boiler suits and hard hats inspect the tanks, valves and gauges around the metal pipes that stretch up, down and across the facility.

In the hush of the control room, away from the hiss of steam and hum of heavy machinery, the refining process is monitored closely on a bank of computer screens.

PHRC boss Bafred Enjugu sees it as a sign that Nigeria is finally "domesticating" the refining of crude into products, thus improving its energy security and ending a reliance on costly imports.

Also Read: Ban on oil tankers lifted

The talk is of job creation, national pride and the chance to help revive an economy badly hurt by the fall in global oil prices as well as providing fuel for the increasing demands of a growing population.

"To give up on the refineries is like giving up on Nigeria. That's how strongly I believe about it and we can't afford to do that," the PHRC managing director told AFP.

"We can't go home and tell our children that we have failed to provide the right platform to take off."

Stop the rot

The Port Harcourt refinery is the country's oldest, built in 1965, nine years after oil was found under the marshy soil and creeks of the delta, where the Niger river runs off into the Gulf of Guinea.

Refineries in nearby Warri, and Kaduna in the north central region, were built in the years that followed, while a new plant was added to the same site in Port Harcourt in 1989.

In recent years, however, the facilities have been more idle than operational.

OPEC-member Nigeria instead sent much of the 1.8 million barrels of crude it now produces daily to foreign facilities, buying back refined products such as petrol at market prices.

By the end of Goodluck Jonathan's presidency, just how reliant Nigeria had become on imports became clear when a dispute between marketers and the government caused a crippling fuel shortage.

Also Read: Oil prices retreat as dealers eye US data

Muhammadu Buhari, elected on an anti-corruption ticket, replaced Jonathan in late May, days after the blockade was lifted, and vowed to end years of graft and mismanagement.

Less than a month later, the state-run Nigerian National Petroleum Company (NNPC), of which PHRC is a subsidiary, said all four refineries would resume operations.

Buhari, who accused Jonathan and his predecessors of having "run down" the refineries since the return to civilian rule in 1999, then sacked the entire NNPC board.

A probe was ordered into "mind-boggling" sums of oil revenue allegedly diverted into private accounts, and a Harvard-educated lawyer was named to run the NNPC and make it commercially viable.

'Thorough overhaul'

Enjugu's efforts and optimism reflect what appears to be a new era and mindset at the NNPC.

The new group managing director, Emmanuel Ibe Kachikwu, has promised to uproot the firm's "anything goes" culture and warned of sackings for under-performance.

The Port Harcourt refineries can refine up to 210 000 barrels of crude a day but are currently operating at 60 percent of capacity.

"After 14 years we have had to clean up, to do a thorough overhaul of the system," explained Enjugu.

Also Read: Oil prices retreat as dealers eye US data

Recurrent pipeline vandalism also means deliveries of crude can for now only come by ship, slowing down the process.

But Enjugu was hopeful targets to boost output can be met within the government-imposed three-month limit to the end of November and the workforce was committed to the task.

"We will make the country proud again... People want to deliver, people want to prove that there is a fortune to be made," he said.

'Responsible, transparent'

Buhari, who stares down from a portrait on Enjugu's wall, helped launch the NNPC in 1977.

In recent years, however, it became a byword for corruption: a murky, state-run body where billions of dollars in revenue apparently disappeared.

But since Buhari's election and pledge to get tough on endemic corruption, Enjugu, significantly, has new watchwords.

The Group managing director "made it very clear and quickly reminds us of being responsible," he added.

"But most importantly it's about being transparent. Transparency means whatever we do, we show. The world is fairly well-connected now. There's enough information to do this transparency.

"I think the issue of corruption can definitely not be there... I think we will bring back the good opinion of NNPC."



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