Not a Drop of Crude Oil was Processed in 3 Months, as Refineries Record Losses for 13 Months

For three consecutive months, not a single drop of crude oil was refined by the three Nigerian refineries under the management of the Nigerian National Petroleum Corporation (NNPC) as they were all dormant over this period, according to the latest report on the operations of the facilities.

The refineries under the management of the NNPC are the Warri Refining and Petrochemical Company, Port Harcourt Refining Company and Kaduna Refining and Petrochemical Company.

For the months of July, August and September, the plants were dormant with respect to crude oil processing as shown in an analysis of the consolidated operations report of the refineries

It was also observed that the consolidated capacity utilisation of the facilities was zero per cent in each of the three months.

The report stated, “In September 2019, the three refineries processed no crude but produced 967 metric tonnes of finished products; primarily from the WRPC and PHRC.

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“Similar to last month, combined yield efficiency is 0.00 per cent owing largely to ongoing rehabilitation work in the refineries.”

The facilities consistently posted losses for 13 straight months in terms of their consolidated financial performance.

Also since September 2018, the three refineries had been posting losses every month, according to the report.

It was observed that the highest single consolidated loss posted by the refineries during the 13-month period was recorded in June 2019, as the facilities lost N17.4bn in that month.

The report further stated that for the month of August 2019, the three refineries produced -9,599MT of intermediate products at combined capacity utilisation of 0.00 per cent.

On the refineries’ economics for the period, September 2019, the report stated that the NNPC had been adopting a Merchant Plant Refineries Business Model since January 2017.

It said, “The model takes cognisance of the products worth and crude costs. The combined value of output by the three refineries (at import-parity price) for the month of September 2019 amounted to N1.03bn.

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“No associated crude plus freight cost for the three refineries since there was no production, while operational expenses amounted to N11.24bn. This resulted in the current operating deficit of N10.20bin and an adjusted deficit of 7.07bn by the refineries, after adjusting for prior overstated deficits by the PHRC.”

The declining operational performance recorded was attributed to ongoing revamping of the refineries, which is expected to further enhance capacity utilisation once completed, the report stated.