Nigeria\u2019s state oil company has moved to revive its long-troubled refining sector by seeking new international partners, following years of costly but underperforming rehabilitation efforts.<\/p>\n
The Nigerian National Petroleum Company Limited (NNPCL) has signed a memorandum of understanding (MoU) with two Chinese firms\u2014Sanjiang Chemical Company Limited and Xingcheng (Fuzhou) Industrial Park Operation and Management Co. Ltd\u2014to explore a technical equity partnership aimed at completing and operating the Port Harcourt and Warri refineries.<\/p>\n
The agreement, signed in Jiaxing, China, marks a strategic pivot for NNPCL after it oversaw rehabilitation projects valued at $2.39 billion that have failed to deliver sustained output.<\/p>\n
The company said the deal follows over six months of engagement and is intended to identify partners capable of restoring and expanding Nigeria\u2019s refining capacity, while also developing petrochemical and gas-based industrial opportunities.<\/p>\n
However, NNPCL did not disclose the financial implications of the new arrangement.<\/p>\n
Costly rehabilitation, limited results<\/strong><\/p>\n Nigeria has invested heavily in revamping its three state-owned refineries\u2014Port Harcourt, Warri and Kaduna\u2014with limited success. In 2021, the Federal Executive Council approved $1.5 billion for Port Harcourt and $1.48 billion for Warri and Kaduna. The projects were structured in phases spanning several years.<\/p>\n Despite these investments, only the Port Harcourt refinery was briefly declared operational, resuming production in late 2023 before shutting down again months later. Warri and Kaduna refineries have yet to achieve meaningful or sustained output.<\/p>\n NNPCL\u2019s latest financial disclosures underscore the scale of the challenge. The company injected an estimated N13.2 trillion into the refineries in 2023 and 2024, covering maintenance, operations and financing costs. Yet the facilities remained loss-making and failed to operate at commercially viable levels.<\/p>\n Combined liabilities of the refineries rose sharply\u2014from N4.52 trillion in 2023 to N8.67 trillion in 2024\u2014highlighting their continued reliance on NNPCL\u2019s balance sheet. Port Harcourt accounted for the largest share of this debt, followed by Warri and Kaduna. NNPCL\u2019s Group Chief Executive Officer, Bashir Bayo Ojulari, has openly acknowledged the scale of the problem, describing the refineries as a \u201cmonumental loss\u201d to the country.<\/p>\n \u201cWe were just wasting money,\u201d he said recently at an energy summit in Abuja, noting that despite regular crude supply and ongoing spending on operations and contractors, the plants operated at only 50\u201355 per cent utilisation and failed to generate meaningful returns.<\/p>\n Ojulari said one of his first decisions in office was to halt refinery operations to stem further financial losses and reassess their viability. The continued underperformance of the refineries has drawn criticism from industry stakeholders and former leaders. Prominent voices in the private sector have urged the government to privatise or sell the assets, arguing they have become a drain on public finances.<\/p>\n Some industry figures have also questioned whether the refineries can ever operate efficiently, given the scale of past spending\u2014estimated by some at over $18 billion across multiple administrations.<\/p>\n Despite this, NNPCL\u2019s leadership has rejected calls for outright sale, insisting the assets can still be revived under the right technical and financial structure. The partnership with Chinese firms signals a shift toward equity-based collaboration, rather than sole reliance on government-funded rehabilitation. Under the proposed arrangement, technical partners would play a direct role in funding, completing and operating the refineries, aligning performance with commercial incentives.<\/p>\n NNPCL said the MoU reflects a shared intention to pursue \u201clong-term sustainable profitability\u201d for Nigeria\u2019s refining assets, though any binding agreements will be subject to further negotiations and regulatory approvals.<\/p>\n For a country that continues to rely heavily on imported refined petroleum products, the success\u2014or failure\u2014of this new strategy could prove pivotal to its energy security and fiscal stability.<\/p>\n","protected":false},"excerpt":{"rendered":" Nigeria\u2019s state oil company has moved to revive its long-troubled refining sector by seeking new international partners, following years of costly but underperforming rehabilitation efforts. The Nigerian National Petroleum Company Limited (NNPCL) has signed a memorandum of understanding (MoU) with two Chinese firms\u2014Sanjiang Chemical Company Limited and Xingcheng (Fuzhou) Industrial Park Operation and Management Co. 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\n\u201cMonumental loss\u201d<\/p>\n
\nPressure mounts for reform<\/p>\n
\nA new approach<\/p>\n