NNPC Partners with African Refinery to Boost Port Harcourt Refinery Complex

The Nigerian National Petroleum Company Limited (NNPCL) has signed a share subscription agreement with African Refinery Port Harcourt Limited (ARPHL) to acquire a 15% equity stake in Nigeria's second-largest private refinery after Dangote Refinery. The agreement, signed on Thursday in Abuja, aims to increase Nigeria's refining capacity by co-locating a new 100,000 barrels per day refinery within the existing Port Harcourt Refinery Complex.

Under the terms of the deal, ARPHL will build and operate the new refinery, which will boost the total refining capacity in Port Harcourt from 210,000 bpd to 310,000 bpd. The project, estimated to cost over $2 billion, is expected to commence construction in 2025 and begin commercial operations by 2027. Upon completion, the refinery is anticipated to produce over 30 million liters of various petroleum products daily, including gasoline, diesel, jet fuel, LPG, and LPFO.

Why this matters: This partnership constitutes a meaningful advancement in NNPCL's efforts to increase Nigeria's domestic refining capacity and reduce the country's reliance on imported fuel. The additional refining capacity will help meet the growing demand for petroleum products in Nigeria and potentially generate revenue through exports.

The agreement was signed by NNPC's Executive Vice-President for Downstream, Adedapo Segun, and ARPHL's Managing Director, Omotayo Adebajo. "The proposed 100,000 barrels per day (kbpd) refinery will be co-located with the existing refineries, increasing the total refining capacity in Port Harcourt from 210kbpd to 310kbpd," stated Segun during the signing ceremony.

The 210,000 bpd Port Harcourt refinery, one of the three national refineries under NNPC's management, was shut down five years ago for revamping. NNPC expects the refinery to reach full capacity later this year after completing the mechanical phase of the turnaround maintenance on December 21, 2023.

This co-location plan was first announced in 2016, and in 2018, NNPC approved a bid from ARPH to set up the new refinery, with NNPC taking a 10% equity stake. ARPH has contracted a subsidiary of the Italian engineering firm Maire Tecnimont Group to build the plant.

The signing of this investment agreement between NNPC and ARPH is an essential step towards increasing Nigeria's domestic refining capacity. It follows the recent commissioning of the giant Dangote Refinery earlier this year, which has already begun supplying diesel and aviation fuel to the Nigerian market. With these developments, Nigeria is making meaningful progress in achieving self-sufficiency in refined petroleum products and reducing its dependence on imports.

Key Takeaways

• NNPCL acquires 15% stake in Nigeria's 2nd-largest private refinery ARPHL.
• New 100,000 bpd refinery to be co-located with existing Port Harcourt refinery.
• Total refining capacity in Port Harcourt to increase from 210,000 to 310,000 bpd.
• Project estimated at over $2 billion, expected to commence in 2025 and operate by 2027.
• Partnership aims to boost Nigeria's domestic refining capacity and reduce fuel imports.