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NIGERIA - The Refineries.

Because of continued maintenance delays, various units at the four refineries are prone to sudden breakdowns. Frequent closures occur as a result of labour unrest. Fires break out frequently, either by accident or as a result of arson or theft. Matters are complicated further by red tape, political interference and incompetence at PPMC.

The four refineries are linked by a 1,500 km pipeline, completed in 1995. The pipeline was built by Spies Capag of France, Techint of Argentina and the British-Lebanese venture Zakhem under a contract awarded in 1991.

Port Harcourt - Alesa-Eleme: The refinery at Alesa-Eleme near Port Harcourt is the oldest in Nigeria. Shell-BP Petroleum Refining Co. was formed in 1960 to build and operate the plant. In 1962, the state acquired 50% in this and Nigerian Petroleum Refining Co. (NPRC) was formed. Work was completed at a cost of N20m and the plant came on stream in 1965 with a 35,000 b/d capacity. In July 1967 operations were stopped with the start of a civil war.

The plant was recommissioned in May 1970. In 1985, the state took over Shell-BP's equity. Its capacity was increased to 60,000 b/d. A major fire in 1988 caused its closure. Another big fire in 1991 kept it closed until late 1993, during which the plant was upgraded to produce higher octane gasoline. But the plant was shut for long periods in the subsequent years. It went back to operation after repairs in May 1999. It was closed in 2003 and in 2006.

The refinery has been supplied with crude oils by pipeline from nearby fields and from across the Niger River. Its output has included premium and regular gasoline, LPG for domestic use, kerosine for households, jet kerosine, gasoil, and low pour and high pour fuel oils for industry.

Port Harcourt - Rivers State: Originally conceived as an export refinery, this plant has a capacity of 150,000 b/d and is relatively the best in the sector. It came on stream in 1989. Fuel oil produced at the plant is partly exported. Clean products are for local use.

When it operates, the refinery supplies most of northern and eastern Nigeria's products, in normal conditions providing a major part of the country's gasoline and jet fuel needs. In the early 1990s, it was the only supplier of products to the Nigerian market, with the other plants all affected by fires, strikes and riots.

The plant's cracker stopped operating in May 1997 after an accident, which caused a serious shortage of gasoline. In mid-1998 its units, apart from the crude oil distillation column, were shut down for repair. Shell was asked to do the repairs. As Shell's bid price was judged too high, the plant's management contracted less qualified firms to do the work. As a result, most units continue to operate at less than their capacity.

Under a $251m contract awarded on March 15, 1994, the Nigerian unit of Singapore-based Ipco Int'l has built an offshore export terminal at the Bonny estuary and a 32-km pipeline to the refinery. Extra storage facilities were built at the refinery as well. They were completed in 1998, three years behind schedule due to payment problems (see background in Vol. 57, No. 6).

Warri: The Warri refinery, located in the centre of the oil-producing region to the west of the Niger Delta, is the second oldest plant in Nigeria and is in the worst condition. The decision to build it was taken in 1971 and the plant was completed in June 1978. It had a 100,000 b/d capacity, which has since been raised to 118,750 b/d.

Warri is the site of the Petroleum Training Institute, which trains Nigerians for various specialised jobs in the oil industry, and of a petrochemical complex. The refinery's output is mainly for Lagos and nearby states, supplying both households and industrial users. Its pipeline system feeds crude oil to the Kaduna refinery.

On Aug. 13, 2002 NNPC awarded a N3 bn ($23m) turn-around and maintenance contract for the Warri refinery to DPN Entrepose Engineering of Italy. Work was finished in early 2003. But the refinery now is not operating.

Normally, Warri gets crude oil by pipeline from the Chevron terminal at Escravos, in the Niger Delta, and from Shell's Quality Control Centre. The FCC unit at Warri underwent restoration work in 1991 (see background in Vol. 57, No. 6).

Kaduna: With a capacity of 110,000 b/d, the Kaduna refinery was closed down in late July 1997 due to an accident. Total in late August 1997 won a three-year contract worth about $200m to repair the plant, partly upgrade some of its units, and operate it. It was agreed that, after the three-year period, if by then local fuel prices had been raised to international market levels, Total may buy equity in the refinery.

But NNPC dismissed Total as a contractor in May 1999, claiming that its work was inadequate. The French major said it maintained its contractual obligations and handed the repaired refinery back to NNPC for start-up in January 1999.

Built at N504m, the refinery came on stream in 1980. It is located in the northern Kaduna province, well away from the other three refineries. It is linked to the other refineries by pipeline. One reason why it was built in the north was to reduce the cost of sending fuels to consumers in that area.

Kaduna was the first refinery project in which NNPC's Nigerian engineers were involved from the outset, along with King Wilkingson of the Netherlands. It started up with a capacity of 100,000 b/d, which was raised to 110,000 b/d later.

The Kaduna refinery has a lubricants unit in addition to an FCC unit and a crude distillation facility. The lubricants unit can process heavy oils (paraffin-based) imported to produce lubricating oils, bitumen, asphalt, sulphur, waxes and greases. A linear alkyl benzene (LAB) unit was commissioned at Kaduna on March 21, 1988. Local and imported crude oils are supplied to Kaduna by pipeline from the Escravos terminal.

Distribution & Marketing: Distribution of oil products in Nigeria is done through more than 7,000 stations. The transport facilities which bring the products to these outlets are managed by PPMC.

Storage and distribution depots are linked to the refineries and port terminals by pipelines. Product distribution is also done by a tanker service, which has been the focus of theft and diversion of shipments.

Oil products were first marketed in Nigeria by Socony Vacuum Oil Co., Mobil's predecessor, which sold Sunflower kerosine. In the mid-1970s, this was expanded to include Mobil, AP, Total, Texaco, National, Agip and Unipetrol. But Texaco has since relinquished 60% equity in its retail affiliate Texaco Nigeria.

Elf Marketing entered Nigeria in the late 1980s along with local entrepreneurs encouraged by the state to participate. Elf was eventually absorbed by Total, which has long operated in Nigeria's downstream sector (see Total's downstream operations in gmt6NigrFieldsAug6-07).

As the economy boomed in the 1970s, oil demand shot up and fuel shortages ensued. The government built pipelines and storage depots. By the late 1980s, 3,001 km of pipelines and 16 storage depots had been built (see news6NigrRefAug8-05).
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Publication:APS Review Downstream Trends
Geographic Code:6NIGR
Date:Aug 6, 2007
Previous Article:NIGERIA - The Oil Refining Sector.
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