NNPC demands profitable refineries, explains Dangote crude supply

The Nigerian National Petroleum Company Limited (NNPC) has announced it will no longer rehabilitate its state-owned refineries without a clear path to profitability, following the disappointing results of past rehabilitation efforts. NNPC Group CEO Bayo Ojulari disclosed this during a media parley in Abuja, where he also explained the company's crude supply to the Dangote Petroleum Refinery.

Ojulari stated that NNPC has learned from previous rehabilitation attempts and is now seeking technical equity partners who have a stake in the performance of the refineries. The company has conducted a three-month on-site due diligence with over 34 top engineers from prospective partners, with the aim of concluding a report that will define the pathway towards profitable and sustainable refineries.

The previous rehabilitation model, Ojulari explained, did not incentivize contractors sufficiently, as they were not given a stake in the refinery's performance after the work was completed. Additionally, NNPC stopped using crude oil to fund rehabilitation arrangements that did not deliver positive commercial outcomes. The company is now focused on working together with partners to ensure the refineries can generate profits.

Ojulari also addressed the concerns over Dangote Refinery's crude supply under the Federal Government's naira-for-crude arrangement. The NNPC continues to supply crude in both naira and dollars, as its upstream commitments are largely denominated in foreign currency. This arrangement is necessary for the company to pay for its commitments, such as payments to drilling rigs and project installations.