NNPC SIGNS $741 MILLION REFINERY DEAL WITH SOUTH KOREA'S - DAEWOO

By Oluwabukola Jimoh ــ Last Update 09 February 2023

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Nigeria's state-owned energy company has landed a US$741 million deal with Daewoo Engineering & Construction Co. Ltd to revitalize an oil refinery in the northern city of Kaduna.

The Nigerian National Petroleum Co. Ltd. signed the maintenance contract with the South Korean engineering company at a ceremony on Thursday, the state-owned company said in a statement that Daewoo will restore production at the shutdown 110,000 barrels per day facility to at least 60% capacity by the end of 2024.

The deal is part of NNPC's effort to reduce Nigeria's near-total reliance on imported fuel, a source of embarrassment for the government of Africa's largest crude oil producer. The company also bought a 20% stake in a massive 650,000 barrels-per-day complex being built on the outskirts of Lagos by Africa's richest person, Aliko Dangote, which will start production later this year after repeated delays.

NNPC currently imports all of Nigeria's gasoline needs, mainly through the exchange of crude for fuel with local and international traders, which it then sells to retailers and wholesalers at heavy losses. The government has said it will scrap the costly subsidy in June, although by then a new government will be in place following elections scheduled for later this month.

The NNPC will finance Daewoo’s “quick-fix” turnaround work at the Kaduna plant — which was commissioned in 1980 — through a mix of its revenue and third-party financing, the state company said, without identifying any lenders.

The company is already paying Italy’s Maire Tecnimont SpA to rehabilitate two state-owned refineries in the oil hub of Port Harcourt that have a combined capacity of 210,000 barrels a day, mainly funding the project with a $1 billion loan from the Cairo-headquartered African Export–Import Bank. Once those facilities and another NNPC plant in the southern city of Warri resume production, the company will hire reputable outside contractors to run them, it said in the statement.

With the importation of LPG maintaining a steady rise against local production in 2019, the Federal Government said that it would rehabilitate the Warri, Port Harcourt and Kaduna refineries to achieve local production of 360,000 MTPA LPG by 2023. However, with this recent development, there is no clear figure on the output of LPG production to be expected from these refineries. Upon full disclosure of what the LPG production or output would be like, LPG in Nigeria will be sure to report on it.

Source: Bloomberg.

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Oluwabukola Jimoh

Oluwabukola Jimoh is a dynamic academic writer and captivating energy blogger. She is able to delve into intricate subjects with an insatiable thirst for knowledge, crafting thought-provoking essays that engage and enlighten her readers.