Bayo Ojulari, the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited, revealed on Thursday that the company is weighing the option of selling off some of its refineries amid persistent hurdles in their rehabilitation.
Speaking with Bloomberg during the 9th OPEC International Seminar held in Vienna, Austria, Ojulari explained that NNPC is currently undertaking a comprehensive strategic review of its refinery operations, which he expects will be finalised before the year ends.
He said, “So we’re reviewing all our refinery strategies now. We hope before the end of the year, we’ll be able to conclude that review. That review may lead to us doing things slightly differently.”
When asked if that could include putting the refineries up for sale, Ojulari said, “But what we’re saying is that sale is not out of the question.
“All the options are on the table, to be frank, but that decision will be based on the outcome of the reviews we’re doing now.”
Nigeria has been working to rehabilitate its long-dormant state-owned refineries, including those in Port Harcourt, Warri and Kaduna.
Although the Port Harcourt refinery resumed operations briefly in November 2023, it was shut down again in May for maintenance.
“So refineries, we made quite a lot of investment over the last several years and brought in a lot of technologies. We’ve been challenged.
“Some of those technologies have not worked as we expected so far. But also, as you know, when you’re refining a very old refinery that has been abandoned for some time, what we’re finding is that it’s becoming a little bit more complicated,” he said.
Ojulari further highlighted Nigeria’s steep oil production costs, revealing that the country spends between $25 and $30 to produce each barrel. He attributed this largely to significant expenditures on securing pipelines.
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“For the cost of crude production, there’s a capital cost and there are the operating costs,” he said. “The operating cost right now in Nigeria is hovering over $20 per barrel, which is quite high.
“Part of that is because of the investment we’ve had to make in terms of security of our pipelines, which, as you know, today we have 100 per cent availability of our pipelines. That came out of significant investment.
“So we believe with time, with stability, that cost will start going down, but for now it’s somewhere between $25 and $30 a barrel,” he said.
Ojulari noted that, in spite of ongoing difficulties, NNPC remains committed to ramping up Nigeria’s oil production to 1.9 million barrels per day before the close of the year.