Ojulari: Reopening PH refinery was costly mistake for Nigeria

The Group Chief Executive Officer of NNPC Limited, Engr. Bayo Ojulari, has admitted that the reopening of the Port Harcourt Refinery resulted in significant financial losses, describing the move as an inefficient use of public funds due to the company’s limited capacity to operate refineries profitably.

Ojulari made the disclosure on Wednesday while speaking at the ongoing 2026 Nigerian International Energy Summit, where he said the restart of the refinery delivered minimal value to the country despite heavy investment and consistent crude oil supply.

According to him, an internal assessment of the refinery’s performance revealed that the facility operated far below expectations, leading to sustained losses for Nigeria.

“What became evident very quickly was that we were operating at a massive loss. We were simply burning money, and I can say that with certainty now,” he stated.

The Port Harcourt Refinery and Petrochemical Company underwent rehabilitation at an estimated cost of $1.5 billion under the previous NNPC management and was reopened in November 2024 after nearly three years of repair works. However, operations were suspended again in May 2025 following continued financial setbacks.

Ojulari disclosed that the refinery ran at only about 50 to 55 per cent capacity, while operational and contractor expenses remained extremely high.

“Crude was being supplied monthly, but utilisation hovered around 50 to 55 per cent. Those crude volumes have value, and we were losing that value while incurring heavy operational and contractor costs,” he explained.

He noted that successful refinery operations depend on strong financing, capable Engineering, Procurement and Construction (EPC) contractors, as well as solid operations and maintenance expertise — capacities he said NNPC currently lacks.

As a result, the national oil company is now revising its approach by seeking partnerships with experienced refinery operators rather than engaging contractors.

“We are no longer looking for contractors or O&M service providers. We want partners that actually run refineries, and this new strategy has the approval of the NNPC board,” Ojulari said.

He added that the successful take-off of the privately owned Dangote Refinery has eased pressure on the Federal Government to rush the revival of state-owned refineries.

“Whether people like it or not, the Dangote Refinery has given Nigeria breathing space. We now have a refinery that is functioning,” he said.

On crude oil production, Ojulari expressed optimism that Nigeria could achieve output of 1.8 million barrels per day (bpd) in 2026, while describing the Federal Government’s earlier projection of 2.06 million bpd as overly ambitious.

He noted that average production in the previous year stood at about 1.7 million bpd.

“For this year, our target is close to two million barrels per day, but the budget is anchored on about 1.8 million barrels per day to avoid overcommitment,” he said.

Ojulari cautioned that inflated production and revenue projections had contributed to Nigeria’s recent fiscal challenges.

“One of the major problems we faced last year was overprojection. We planned spending based on assumptions that did not materialise when oil prices dropped and output fell short. The consequences were significant,” he added.

He stressed that realistic production targets and credible planning are essential to preventing future budget deficits and ensuring financial stability.