NNPC Considers Refinery Sales Amid Costly Rehabilitation and Strategic Review
The Nigerian National Petroleum Company (NNPC) is considering the possible sale of some of its state-owned refineries as part of a broader strategic overhaul to address persistent challenges in its rehabilitation efforts.
Speaking to Bloomberg at the 9th OPEC International Seminar in Vienna, NNPC Group CEO Bayo Ojulari revealed that the company is conducting a comprehensive review of its refinery operations, expected to be completed by the end of 2025.
Ojulari confirmed that all options are on the table, including divestment, as the company re-evaluates its approach to managing and operating the refineries.
“We’re not ruling anything out,” he stated. “The final decision will depend entirely on the outcome of the ongoing evaluation.”
Nigeria has long struggled to revive its aging and underperforming refineries located in Port Harcourt, Warri, and Kaduna.
Although the Port Harcourt refinery resumed operations briefly in November 2023, it was shut down again in May 2024 for further maintenance.
Ojulari identified outdated infrastructure and obsolete technologies as key obstacles, noting that even with substantial investments in upgrades, some systems have fallen short of expectations.
“Bringing these refineries back online has proven more complex than anticipated,” he admitted, pointing to decades of neglect as a major factor.
NNPC’s production costs remain high, ranging between $25 and $30 per barrel, largely due to significant investments in pipeline security.
While Ojulari acknowledged that the company has achieved 100% pipeline availability, he emphasized that the cost of maintaining that level of security is substantial.
However, he expressed optimism that operating expenses would decrease over time as infrastructure becomes more secure and stable.
Despite these setbacks, NNPC remains committed to increasing Nigeria’s oil production, with a target of reaching 1.9 million barrels per day by the end of 2025.
The potential refinery sales, if pursued, would mark a major shift in strategy for NNPC and could open the door for private investment and modernization in the downstream sector.
