NNPC signs $741 million deal with Daewoo for Kaduna Refinery
The Nigerian National Petroleum Company (NNPC) Limited has signed a $741 million maintenance service contract with a South Korean engineering firm, Daewoo Engineering and Construction Company Limited for a quick fix repair of Kaduna Refinery and Petroleum Company (KRPC).
The signing ceremony which was held on Thursday at the NNPC Towers in Abuja was disclosed in a statement issued by the NNPC.
This is coming a few weeks after the federal government announced that the commencement of operations at the 60,000 barrels per day Port Harcourt refinery has been shifted from December 2022 to the first quarter of 2023.
Production to commence end of 2024
The NNPC said that under the terms of the agreement, Daewoo will restore production at the inoperative 110,000 barrels-a-day facility to at least 60% of its capacity by the end of 2024.
The current deal is part of efforts by the federal government to reduce Nigeria’s over-dependence on imported petroleum products, a source of huge embarrassment to a country that is Africa’s largest crude oil producer.
The NNPC currently imports all of Nigeria’s petrol needs mainly through crude-for-fuel swaps with local and international traders, with the resultant pressure on the country’s foreign exchange.
The NNPC is expected to finance Daewoo’s “quick-fix” turnaround work at the Kaduna Refinery and Petrochemical plant, which was commissioned in 1980, through a mix of its own revenue and third-party financing, according to the state-owned oil giant.
For the record
- Recall that in October 2022, the NNPC and Daewoo signed a Memorandum of Understanding (MOU) to rehabilitate the 110, barrels per day Kaduna Refinery. Daewoo Group is also involved in ongoing rehabilitation works at the Warri refinery which is expected to start working by 2023.
- The Federal Executive Council (FEC) had earlier in August 2021, approved the sum of $1.4 billion for the rehabilitation of Warri and Kaduna refineries.
- The NNPC had already contracted Italy’s Maire Tecnimont SpA to rehabilitate 2 of its refineries in the oil hub of Port Harcourt that have a combined capacity of 210,000 barrels-a-day, with the project being primarily funded with a $1 billion loan from the Cairo-headquartered African Export–Import Bank (Afeximbank).
- As part of its plans to ensure energy security, the federal government revealed that it had acquired shares in 4 private refineries operating in different parts of the country. The listed refineries include the 650,000 barrels per day integrated Dangote Refinery in Lagos; 12,000bpd Azikel Modular Refinery in Bayelsa; 5,000bpd Waltersmith Modular Refinery in Imo; and 2,500bpd Duport Modular Refinery in Edo.