NNPCL, Daewoo Agree To Repair Kaduna Refinery For $740.61 Million

The Kaduna Refinery & Petrochemical Company (KRPC) Limited will be renovated, according to a contract that the Nigerian National Petroleum Company Limited yesterday signed with Daewoo Engineering & Construction Nigeria Limited.

The contract, which is a follow-up to the memorandum of understanding for the rehabilitation of the refinery that NNPC and Daewoo Group of South Korea signed last October in Seoul, South Korea, in front of President Muhammadu Buhari and other senior government officials, is for 2022 World Bio Summit.
The KPRC Quick-fix Contract, worth US$740.6 million, is expected to be finished in 21 months and will allow the refinery to run at a minimum capacity utilization of 60%.

Group Chief Executive Officer of NNPC, Mele Kyari, stated that the oil company aims to restore 18 million liters of refining capacity with the Kaduna, Warri, and Port Harcourt refineries during the contract signing ceremony yesterday at the NNPC headquarters in Abuja.

He claimed that it is impossible for a developing nation to discuss energy security without bringing up petroleum products, and the only way we can ensure this is by restoring local refining capacity.

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“We are conscious of the fact that about four refineries in three locations are down now, all of them are now under some form of rehabilitation process.

Port Harcourt is well on course, Warri also is very clearly on course and on schedule and also we are committing to the Kaduna refinery today and together and ultimately our 18 million litres gasoline production capacity will be restored.

This, Kyari said “will also complement the potentials at Dangote Refinery, which we have 20 per cent equity and ultimately we are very, very hopeful that this year this country would be self sufficient in the supply of petroleum products into our country, particularly gasoline.”

He expressed hope that the plant will be delivered on schedule and assured them of the security of their personnel and equipment when they come to Nigeria.

The 110,000 bpd-capacity Kaduna Refinery is one of Nigeria’s four refineries that have produced no fuel for years leaving the country to rely on imported petroleum products.

The biggest state-run refinery, which is Port Harcourt (PHRC), is currently undergoing repairs handled by Tecnimont of Italy.

Also speaking, the NNPC executive vice president, Downstream, Adeyemi Adetunji, said it is a great honour that they are signing the maintenance service contract for the refinery.

“This marks a milestone in the history of KRPC considering that the last Turn Around Maintenance (TAM) on the refinery occurred about 15 years ago,” Mr Adetunji said.

He noted that the project was framed after extensive engagement with Daewoo on the quick-fix strategy to repair and re-stream KRPC and operate it on a sustainable basis at a minimum capacity utilisation of 60 per cent.

“This project shall be executed in three work packages as a Maintenance Services contract by Daewoo E&C Nigeria Limited at an estimated maximum cost ceiling of $740,669,600.00 with a duration of 21 months.

“The quick-fix strategy guarantees the fastest route to restreaming Warri Refinery Petrochemical Company (WRPC) and KRPC for in-country production of refined petroleum products.

“Restoring WRPC and KRPC back to operation will guarantee energy security for the country and reduce dependence on imported petroleum products in view of near total dependence on the supply of imported petroleum products and the impact the ongoing Russia-Ukraine war is having on global supply,” he said.

He explained further that the plan will generate revenue, reduce demand for forex, supply raw materials to industries, create employment for Nigerians and ensure technology transfer, amongst other benefits.

“The proposed quick-fix initiative on KRPC is expected to restore it to a minimum of 60 per cent of its nameplate capacity by Q4 2024,” he added.

He said NNPC Limited is using a combination of internally generated revenue and third-party financing to execute the repairs of the refineries.

He added that post-rehabilitation of the three refineries, globally reputable operations and maintenance contractors shall be engaged to run the refinery safely, reliably, sustainably and profitably.

He, however, implores total commitment from all staff in ensuring that the project is successfully executed, noting that over 200 million Nigerians are looking up to NNPC Limited to deliver on the mandate.

He said the board and management of NNPC Limited are fully committed to providing all the required support to ensure that the refineries are fixed.

Meanwhile, he said the rehabilitation of PHRC has progressed considerably.

“The old refinery is currently at 64 per cent completion and the plant is expected back in operation in Q2 2023, while the entire PHRC Rehabilitation Project currently stands at about 59 per cent.

“On the other hand, WRPC Quick-fix Project has achieved 28 per cent completion and is expected to be re-streamed by the end of this year,” he said.