Business Oil and Gas

NNPCL, Daewoo Sign $740.6m Deal To Fix Kaduna Refinery

Nigerian National Petroleum Company Limited (NNPCL), yesterday signed a contract with Daewoo Engineering & Construction Nigeria Limited for the rehabilitation of the Kaduna Refinery & Petrochemical Company (KRPC) Limited.

The contract, which is sequel to the memorandum of understanding that NNPC signed with Daewoo Group of South Korea on the sidelines of the 2022 World Bio Summit in Seoul, South Korea for the rehabilitation of the refinery last October, and witnessed by President Muhammadu Buhari and other top government officials.

Valued at US$740.6 million, KPRC Quick-fix Contract, scheduled for completion in 21 months, will enable the refinery to operate at minimum capacity utilisation of 60 per cent.

Speaking at the signing of the contract yesterday at the NNPC headquarters in Abuja, group chief executive officer, NNPC, Mele Kyari said the oil company is targeting to restore 18 million litres refining capacity ultimately with the Kaduna, Warri and Port Harcourt refineries.

He said there’s no way a developing country can talk about energy sufficiency without talking about petroleum products and the only way we can guarantee that is to have local refining capacity restored.

“We are conscious of the fact that about four refineries in three locations are down now, all of them are now under some form of rehabilitation process.

Port Harcourt is well on course, Warri also is very clearly on course and on schedule and also we are committing to the Kaduna refinery today and together and ultimately our 18 million litres gasoline production capacity will be restored.

This, Kyari said “will also complement the potentials at Dangote Refinery, which we have 20 per cent equity and ultimately we are very, very hopeful that this year this country would be self sufficient in the supply of petroleum products into our country, particularly gasoline.”

He expressed hope that the plant will be delivered on schedule and assured them of the security of their personnel and equipment when they come to Nigeria.

The 110,000 bpd-capacity Kaduna Refinery is one of Nigeria’s four refineries that have produced no fuel for years leaving the country to rely on imported petroleum products.

The biggest state-run refinery, which is Port Harcourt (PHRC), is currently undergoing repairs handled by Tecnimont of Italy.

Also speaking, the NNPC executive vice president, Downstream, Adeyemi Adetunji, said it is a great honour that they are signing the maintenance service contract for the refinery.

“This marks a milestone in the history of KRPC considering that the last Turn Around Maintenance (TAM) on the refinery occurred about 15 years ago,” Mr Adetunji said.

He noted that the project was framed after extensive engagement with Daewoo on the quick-fix strategy to repair and re-stream KRPC and operate it on a sustainable basis at a minimum capacity utilisation of 60 per cent.

“This project shall be executed in three work packages as a Maintenance Services contract by Daewoo E&C Nigeria Limited at an estimated maximum cost ceiling of $740,669,600.00 with a duration of 21 months.

“The quick-fix strategy guarantees the fastest route to restreaming Warri Refinery Petrochemical Company (WRPC) and KRPC for in-country production of refined petroleum products.

“Restoring WRPC and KRPC back to operation will guarantee energy security for the country and reduce dependence on imported petroleum products in view of near total dependence on the supply of imported petroleum products and the impact the ongoing Russia-Ukraine war is having on global supply,” he said.

He explained further that the plan will generate revenue, reduce demand for forex, supply raw materials to industries, create employment for Nigerians and ensure technology transfer, amongst other benefits.

“The proposed quick-fix initiative on KRPC is expected to restore it to a minimum of 60 per cent of its nameplate capacity by Q4 2024,” he added.

He said NNPC Limited is using a combination of internally generated revenue and third-party financing to execute the repairs of the refineries.

He added that post-rehabilitation of the three refineries, globally reputable operations and maintenance contractors shall be engaged to run the refinery safely, reliably, sustainably and profitably.

He, however, implores total commitment from all staff in ensuring that the project is successfully executed, noting that over 200 million Nigerians are looking up to NNPC Limited to deliver on the mandate.

He said the board and management of NNPC Limited are fully committed to providing all the required support to ensure that the refineries are fixed.

Meanwhile, he said the rehabilitation of PHRC has progressed considerably.

“The old refinery is currently at 64 per cent completion and the plant is expected back in operation in Q2 2023, while the entire PHRC Rehabilitation Project currently stands at about 59 per cent.

“On the other hand, WRPC Quick-fix Project has achieved 28 per cent completion and is expected to be re-streamed by the end of this year,” he said.

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