Justifying the NNPC’s stake purchase drive, sources close to the industry, narrated that the structure of the oil industry shifted in 2014, from supply tightness to supply surplus.The industry is facing further structural shifts as the world embarks on an energy transition away from oil in order to reduce carbon emissions and with this demand shift, it is increasingly vital for oil producers to have a guaranteed buyer for their crude and this is where the refineries come in.
The new NNPC will go to the capital market to source for capital to fund its investments and will have to deliver adequate returns to sustain its operations. In March, the federal government approved $1.5 billion to rejuvenate two NNPC-owned facilities in Port Harcourt that have the capacity to refine 210,000 barrels of crude per day, while the privately held BUA Group recently announced plans to build a 200,000 barrels-per-day plant.
According to Devakumar Edwin, group executive director, of the refinery, the firms from Western and Middle East countries and involved in trading and crude production and are looking to secure crude supply agreements, a similar objective being pursued by the NNPC. Edwin said the refinery is scheduled for mechanical completion this year with commissioning by January 2022.