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The first phase of a project to rehabilitate Nigeria’s 210,000 b/d Port Harcourt (PH) refinery, which had been slated for completion in April this year, may not be finished for another four months at least, refinery and oil ministry sources told market data and business intelligence platform Argus.
The Nigerian government awarded Italian engineering firm Maire Tecnimont a $1.5bn contract for the rehabilitation work in April 2021.
At the time, the Italian company said the first phase of the work would be completed in 24 months, with the second and third phases taking 32 and 44 months, respectively.
But the first phase has missed its April 2023 target and may not be completed until September, an oil ministry source told Argus.
A source at Port Harcourt suggested that September may be ambitious, indicating that a quick-fix programme at Nigeria’s 125,000 b/d Warri refinery, scheduled to finish by November, could be completed first.
Warri is undergoing a $492mn repair programme under a contract awarded to South Korean engineering firm Daewoo.
Port Harcourt, Warri and state-owned NNPC’s other refinery — the 110,000 b/d Kaduna plant — operated at under a fifth of their combined capacity in the 10 years before 2019.
Warri and Kaduna were shut down in 2019, and Port Harcourt in 2020, leaving Nigeria totally reliant on imports to serve its 485,000 b/d oil products market.
The Port Harcourt project is understood to have fallen victim to the perennial constraints of Nigeria’s public finance management.
Unlike national personnel expenditure that is released monthly and overhead expenditure that averages eight releases annually, funds for capital expenditure are released infrequently in tranches that are often delayed until the second half of each year.
This has meant Port Harcourt is not always able to meet Maire Tecnimont’s invoices when they are due.
Sources have also questioned Maire Tecnimont’s processes for selecting and managing sub-contractors, saying weak performance by some sub-contractors has contributed to the delay.
Although the Port Harcourt refinery was shut down in April 2020, NNPC occasionally brings imported product through the refinery’s jetty for storage in its tank farms.
NNPC has been Nigeria’s only importer of gasoline since 2017.
Before the shutdown, Port Harcourt had operated at only minimal rates for years, but its tanks still hold some intermediate products. Data from Vortexa show 17,700t of vacuum gasoil (VGO) was shipped from Port Harcourt to Portugal earlier this month.