Business Oil and Gas

Bombshell: Billions of dollars on rehab of PH Refinery a waste of money because product will not meet standard, says veteran petroleum engineer

· Calls for upgrade, not rehabilitation

· Describes the refineries as not old

· Fears Nigeria may have two petrol grades in the market

·In terms of market positioning, Dangote refinery (Lekki) cannot compete with the Kaduna refinery

By Ignatius Chukwu

Nigeria may have spent $25 trillion on its three old refineries but a veteran petroleum engineer who was part of the designing of some the refineries has thrown a bombshell, saying the money will be a waste due to the grade of product expected from the Port Harcourt Refinery.

The engineer, Babajide Soyode, who retired from the Nigerian National Petroleum Company (NNPC) long ago but now consults for Dangote Industries Limited in Lagos, said in Port Harcourt in the week that he has issues with the NNPC over the work being done at the PH Refinery. 

Reuters reported on May 31, 2023, that Nigeria spent more than N11.35 trillion  ($25 billion) on fixing the country’s three moribund refineries in the past 10 years, saying it was the finding of the then outgoing parliament.

The report said the Nigerian parliament called for a forensic audit of the matter because despite the huge amounts spent to rehabilitate the refineries, they were producing at less than 30 per cent capacity, thus subjecting Nigeria to product importation and subsidy.  

Soyode delivered a keynote address at the just-concluded 6th international conference organised by the Centre for Gas, Refining, and Petrochemicals (CGRP) of the University of Port Harcourt where he made startling revelations. He led the Conference to demand for handover of the refineries to private hands and never to import modular refinery units but to rather fabricate the components locally. 

Speaking on the sidelines to newsmen, the expert gave conditions that would make the old refineries to meet what he termed African specification. He insisted that the rehabilitation work going on and gulping billions of Dollars would not yield standard grade of petroleum. 

He said: “That is why I quarrel with the NNPC rehabilitation. It is a waste of money. The refinery cannot meet specification because what they produce has a lot of Sulphur. Dangote in Lagos will produce its own specification. It means two grades will be in the market. 

“The Port Harcourt product will have a lot of Sulphur. You can’t run your car well in your truck with that grade.” 

Rejecting rehabilitation instead of upgrade which would come at the same amount, the expert said what is happening is; ‘Atrophy of industrial imagination’, regretting that our imagination is dead. 

He went on to state that it is same amount of money they are spending to rehabilitate the Port Harcourt Refinery but it would have been better to upgrade to present technology. “They built it in old times; in the 1960s and 1970s, but you can get 20 to 40 per cent increase in capacity for free by upgrading. Just buy new tray, you get higher grade.” 

Clarifying his submission at the conference as keynote speaker, Soyode: “In one sentence, I told them that we must do ‘Make in Nigeria’. This is to support manufacturing in Nigeria. We must make the equipment and spare parts and everything in Nigeria to support the oil and gas industry. By this, you can have the infrastructure to make and develop the industry. It will help to maintain equipment and challenge for the future. 

“We should ask questions about what critical thing we must import from outside to do well at home. Do strategic thinking to fabricate most things in Nigeria.” 

On the way forward, the Dangote consultant said; “It will be foolish to import everything. We have been operating refineries since 1965, yet we can’t make a distillation tray, which is the fundamental component in petroleum refining. See those columns in see at the refinery, inside is mere plate. We can’t make one in Nigeria in 68 years, with all the brains.” 

He gave example with modular refineries. “Let the Nigerian Content Development and Monitoring Board (NCDMB) not sponsor import of modular refineries except it is fabricated in Nigeria. If we can’t fabricate them, then we should forget it. 

“We may not import it as they are but we can fabricate the major parts. They will produce petrol that meets specification. Right now, modular refineries cannot meet specification. Even the Port Harcourt Refinery cannot produce according to specification.” 

He said even now, Nigeria has problem. “The Port Harcourt specification and the Lagos specification exist. NCDMA can tell modular refineries to produce to specification. They can make them to fabricate the right modules. They are built in factories and shipped. Let us have a complete refining complex not just crude distillation. The different units can be mentioned and listed for fabrication.” 

He suggested that the NCDMB can sponsor local fabricating entities especially of the Centre for Gas, Refining and Petroleum (CGRP) can make those new modules. “They can do the study, it’s a challenge. The NCDMB can sponsor them. The US and others cannot make modular because they are too small, but we can make it. Our young engineers can be grouped to make it. That is why I call it ‘Atrophy of industrial imagination’. Our imagination is dead. 

“The media has upgraded. That’s the same thing. Nigeria has enough capacity to do it. There are many factories that can be upgraded to it. I am not talking about nuclear bomb, just modular refineries. We can do it. Am not saying it’s cheap or easy, but it can be done. 

“We have the market for it. If you produce, the market will absorb it. As long as government says we are ready to make modular refineries, so, let’s get the correct specification and make it.” 

He is sure that few persons can buy the Port Harcourt refineries and own it and upgrade it. “The refineries are good. They can be upgraded. Some US refineries are 120 years, doing well. Just upgrade and put new plates and you have new refineries. 

“Those refineries in Port Harcourt, Warri and Kaduna are occupying the best refining sites in Nigeria. In refineries, you look for market, not crude oil source. You take pipeline to it. It’s the market that matters. We got the best site surveyors in the UK to decide where to site refineries. The market is there.” 

He went on: “Even Dangote Refineries cannot compete with Kaduna refineries. You have to truck finished product. Why they import crude from Nigeria and not product. Its easy to import crude. By the time we were doing Warri Refineries, we were studying Port Harcourt Refinery. The British media insulted us because they were exporting the byproducts from us to abroad but we designed the refinery that would use the by product. We made our projections. 

“I am not accusing them of stealing money but I am saying that rehabilitation is not good. It is better to upgrade them.” 

Soboye said he was the chief engineer of Warri and Kaduna refineries and was in the NNPC. “We designed all these things they are doing.


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