Tuesday, 18 August 2015

Hope for Nigeria: Making refineries profit oriented

THE new Group Managing Director, GMD, Nigerian National Petroleum Corporation, NNPC, Dr. Emannuel Ibe Kachikwu
NNPC GMD, Dr. Emmanuel Ibe Kachikwu
He said the Corporation is being transformed into an efficient and profit-oriented organisation, with a view to turning around its fortunes, and especially that all the refineries of the Corporation will be efficiently and profitably to meet the energy needs of the country., during his first meeting with the management and staff of the Corporation told them that NNPC is no longer a civil service institution.

He even gave a 60 day timeline during which some of the strategic targets would be translated into concrete milestones to the appreciation of all Nigerians.
The nation’s refineries
Although the Federal Government is yet to pay the outstanding over N300billion subsidy claims to oil marketers, which has frustrated fuel importation, there has been a general ease of tension in petroleum products distribution.
This is because with the news of the re-streaming of the refineries at the end of July, pressure had been substantially taken off the marketers to make products available to Nigerians, even as the refineries are producing more fuel oils than premium motor spirit, PMS or petrol.
This is due to the fact that the refineries fluid cracking catalytic units, FCCUs, have not been fully rehabilitated in the ongoing phased rehabilitation of the refineries.
Refineries turn around maintenance
Under normal circumstances, the refineries turn around maintenance, TAM, should be done every two years. But for over 15 years since 1990, no major TAM has been carried out in the refineries, a development that almost shut down the refineries completely, leading to high level of products importation.
When the refineries become fully operational, they have the capacity to reduce fuel importation by at least 40 percent or more.  However, there have been a lot of controversies surrounding the TAM, of Nigeria’s four refineries with a combined capacity of 445,000 barrels per day.
The controversies have been more as a result of lack of information by from the NNPC on the type of maintenance being carried out in the refineries by whom.
The situation went back and forth with the hope of the maintenance to be carried out by the original equipment manufacturers, until it became obvious that this was not possible due to the insecurity situation in the country. Government and the NNPC had to resort to using local contractors for the phased rehabilitation of the refineries.
Chrome Consortium
Even at that, there were claims and counter claims about the capacity of the local contractors to properly execute the job. So far, only one of them, Chrome Oil Services, COS, has openly come out to show proof of what they are doing.
Chrome this weekend handed over the fully rehabilitated FCCUs of the Port Harcourt Refining Company, PHRC 2, this weekend, which has restored operations to 95 percent of its 150,000 barrels per day, bpd, throughput capacity, and from there will proceed to the Refinery Complex 1.
The Project Manager, Chrome Oil Services, Mr. Bombey Adigbara, told journalists recently, that Chrome is the only contractor handling the rehabilitation of Nigeria’s firstrefinery complex of 60,000bpd, commissioned in 1965.
According to him, “The FCC is 98% completed. The FCC has a lot of critical components and it is also vendor specific, so you have to have a lot of experience to work in that place. We have achieved 98% and when it comes up you will have a reduction in the importation of PMS.
“This is how the refinery works: when CDU starts, it will run for some days to make enough feed for VDU, which are in Area 1. If there is enough feed for VDU, it will come up and will run for about 10 days to make enough feed for FCC. The VDU came up about two days ago, and if in 10 days the FCCs do not come up, it will create problems for the VDU because of storage, as FCC must take the feed to produce PMS. So the FCC must come up next week.”
Chrome capacity
Adigbara also dismissed widespread speculations about the capacity of Chrome Oil Services to execute refinery TAM, saying that before the 1999/2000 TAM for PHRC, Chrome had carried out a number of works for the Kaduna and Warri refineries as well as the Indorama Elema Petrochemical Company.
He said the PHRC TAM “was carried out by COS in conjunction with some foreign partners, leading to the formation of a consortium, Chrome Oil Consortium, and COS was the lead partner. The TAM was carried out under the supervision of Shell International Manufacturing Services, SIMS.”
Furthermore, he disclosed Chrome had also worked of the PHRC 2 steam boilers built in 1987 as the refinery to sustain the process plants.
With proof of contract awards and job satisfaction certificates, as enclosed herein, he demonstrated the company’s capacity to execute the job efficiently and effectively.   Besides, he noted that it is on account of this efficiency that Chrome had remained at the PHRC since the 2000 TAM, offering intervention services, adding that in 2015 alone, Chrome had dome more than 50 jobs in the refinery to keep it running.
“Since 2000 Chrome has remained on intervention, the refineries have been working, but there is the issue of crude swap/OPA. But the main issue is that if the TAM was not done every two years, so the refinery is working at all is because we are there, although they have not been working at optimum capacity.”
Feedstock/Swap agreements
Also speaking, the Executive Chairman, Chrome Group, Sir Emeka Offor, noted that the problem with the refineries is not just about TAM, which should be done every two years, but also with the lack of crude supply following government’s swap and Offshore processing agreement, OPA.
According to him, “The issue with the refinery is not only TAM but lack of feedstock to sustain their operations.  The cost of TAM is very high and if you finish TAM and no feedstock then it is not economical.” He also added that pipelines vandalism came to compound the issues, saying that “Federal Government and NNPC must ensure adequate supervision of the pipelines to reduce vandalism to the barest levels.”
However, to achieve success, Offor, he said: “This requires a lot of education and awareness among Nigerians, because Nigeria is the only country that experiences pipelines and electrical equipment vandalism; it does not happen anywhere else – not America, Europe, Asia. So these two components are key to getting the refineries to function. This education should not be left to government or NNPC alone, but a collective responsibility involving governments at all levels, civil society groups and the media.”
If the refineries operations are to be sustained for  rofitability as Kachikwu said, then the refineries do not only need to be rehabilitated, but their turn around maintenance should and must be carried out as and when due.

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