January 21, 2022

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From Port Harcourt Refinery, Hope Rises For Nigerians

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Edith Chuku

There are high hopes that Nigerians will soon heave a sigh of relief. There are hopes that petroleum products will soon come out from the hitherto abandoned Port Harcourt refinery, where rehabilitation work is seriously on-going at the moment.

Signals to this effect emerged when members of the House of Representatives Committee on Petroleum Downstream visited the Port Harcourt to see the progress of work at the refinery, as part of their oversight duties.

In March last year, the committee, led by its chairman, Dr Abdullahi Gayi had led the same team to the refinery where they assessed the state of affairs at the refinery and left with a firm promise: to ensure that action begins at the refinery, with a view to bringing it back to life.

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Some months after that visit, the federal government, through the persuasion of the committee and the leadership of the lower chamber of the National Assembly, took some decisive steps leading to the award of contract for the rehabilitation of the refinery. The expectation is that by next year, the rehabilitation work would have been completed.

At Tuesday’ s second visit to the refinery, Gaya was upbeat when he was told by the managing director of the company, Ahmed Dikko, that every effort was being made to ensure that the timelines for rehabilitation and eventual resumption of crude oil refining will be followed religiously.

In his address during a courtesy call on the managing director, Gaya had said that “ you may recall that, the committee on Petroleum Resources Downstream last year under my leadership paid the first oversight visit to the Refinery on 11th March, 2020, where I had the singular honour and privilege of conveying to you the greetings and wishes of good tidings from the Honourable Speaker of the House of Representatives, Rt Hon. Femi Gbajabiamila, where he requested me to further inform you that the House of Representatives was completely committed to ensuring that the refineries in Nigeria return to their former glory by functioning optimally, to guaranty the independence of the downstream petroleum sector in Nigeria.

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“You may further recall that the committee carried out intensive oversight with a very thorough investigation on turnaround maintenance, where views/opinions of the operators based on their observations and experiences were sought, with the aim of discovering all the challenges militating against the normal functioning of the refinery, with the view to providing a lasting solution to the problem. Today, we are extremely happy to be with you again on a follow-up on our promise on the provision of a lasting solution. This refinery was carefully and expertly selected to be the first refinery to be suitably rehabilitated in line with the promise of the committee.

“It may further interest you to note that this oversight visit is scheduled for now to enable the committee assess the work so far done, its quality in comparison with the sum spent (value for money), possible timely completion of the project and to check if there is need for further interventions for the general benefit of the nation. As you are all aware that the Petroleum Industry Bill has been accented to by Mr. President and Commander in Chief of the Arm Forces of the Federal Republic of Nigeria, Muhammadu Buhari, where he directed the implementation of the Act within a year. This will tremendously assist in gaining the independence of the downstream sector of the petroleum industry in line with international best practices that will attract both local and international investors, sustain and promote the provisions of employment, technology development, self-reliance and economic advancement. The committee calls on all stakeholders to cooperate with it in providing useful information that will assist in attaining its assigned mandate. The achievement of the committee in this respect requires collective responsibility and a collective achievement is an achievement for all Nigerians.”

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The committee was taken round the refinery to see things first hand. They saw the progress of work and raised concerns where necessary. Gaya, while speaking with journalists after the tour expressed the hope that the contractors would keep to their words on the deadline for the completion of the rehabilitaiton work. He said the committee would be back to the refinery in the first quarter of next year to ascertain the progress of work.

Also speaking with journalists, Dikko assured that the 2022 target for the completion of rehabilitaiton work was realisable. He expressed appreciation to the committee for their support and contributions towards the resuscitaiton of the refinery.

He said “the project has just started and we are putting our energies around all the refinery which we promised. We will complete within 24 months. And we have covered a lot of grounds to reach where we are today. So basically, that is our main intent, we have done enough and we are still doing enough to make sure we meet that obligation to complete the whole refinery within 24 months, while we still working on other parts of the refinery.”

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The Journey So far

The  Federal  Government  drive  to  boost  in-country refining  capacity  gave  rise  to  the  approval  for  the rehabilitation of Refineries. The  First  Phase  of  this  rehabilitation  project  was completed  in  2019.  The  scope  centered  on  Plant Integrity  Survey and Scope of work Definition for  the Engineering,  Procurement,  Construction,  Installation and Commissioning (EPCIC)·

The  Federal  Executive  Council  graciously  approved the contract of EPCIC on 17th  March 2021.

The EPCIC for the Port Harcourt Refinery rehabilitation project has commenced and is making good progress The  Federal  Government  drive  to  boost  in-country refining  capacity  gave  rise  to  the  approval  for  the rehabilitation of Refineries. The  First  Phase  of  this  rehabilitation  project  was completed  in  2019.  The  scope  centered  on  Plant Integrity  Survey and Scope of work Definition for  the Engineering,  Procurement,  Construction,  Installation and Commissioning (EPCIC)·

The  Federal  Executive  Council  graciously  approved the contract of EPCIC on 17th  March 2021. The EPCIC for the Port Harcourt Refinery rehabilitation project has commenced and is making good progress The Federal Government drive to boost in-country refining capacity gave rise to the approval for the rehabilitation of Refineries.

The first Phase of this rehabilitation project was completed in 2019. The scope centered on Plant Integrity Survey and Scope of work Definition for the Engineering, Procurement, Construction, Installation and Commissioning (EPCIC). The Federal Executive Council graciously approved the contract of EPCIC on 17th March 2021. The EPCIC for the Port Harcourt Refinery rehabilitation project has commenced and is making good progress. The project is aimed at restoring the plant to a minimum of 90% nameplate capacity utilization.

This capacity utilization shall imply among other thing an addition of 11Million liters of PMS daily to the Nigerian market. This increase in domestic refining capacity will definitely make a positive impact on the Nigerian economy with the reduction in import PMS that will follow. It is also note worthy that Aviation Turbine Kerosene will be one of the products that will be produced post-rehabilitation. It is expected that Nigeria will then be the hub for Aviation fuel supplies to West Africa.

Project Scope

The Project scope cuts across the following:- Process Areas 1, 2, 3 (NPHR) and 5 (OPHR) Power Plant and Utilities Offsites Jetty Wastewater Treatment Plant Distributed Control System (DCS), Emergency Shut down (ESD) and Fire & Gas System (FGS) Technical Buildings Non-Technical Buildings Pipelines Repairs Etc.

Project Handlers

Main Contractor –TECNIMONT Spa of Italy Project Management Consultant/Owner’s Engineer (PMC/OE) – NETCO/KBR Refinery Project Coordinator – Wood-Mackinzie. The main contractor has mobilized to site with kick off meeting held on 6th May, 2021. The following subcontractors have so far mobilized to site: Broadview & Fortune Energy & Engineering (Laser Scanning) Montego (Area 5 Construction) Emeacomtel (Temporary Construction Facilities) Cakasa (Tank Rehabilitation) Supasteel (Tank Rehabilitation) Dormanlong (Tank Rehabilitation) Beamco (Rotating Equipment) Pivot GIS (Logistics) Milat Nig. Ltd (Rotating Equipment) Universal Oil Product (UOP as Licensor)

HSE Statistics

q   Over 150,000 man-hours already achieved on the project

q   Zero lost time injury

q   Zero fatality

q   Zero damage to property

q   One (1) near miss recorded which has been addressed

Security

q   Zero security breech

Nigeria Content compliance: Contractor is complying with the provisions of the NCD Act and we can see active participation of Nigerian companies as sub-contractors in the project.

Host Communities relationship

q   MOU signed between Contractor and the Community Leaders detailing expectations by the communities from the contractor.

q   There has been Zero unrest so far due to the robust community relation engagement between Owner/Contractor and the host communities

Completion Timelines

The Project completion period for the entire works is forty-four (44) months from effective date (6th April 2021). The project duration is in three phases:

v  Phase I: Process Area 5 works to be completed in twenty-four (24) months; Start-up Date 5th April 2023

v  Phase II: Process Area 1 and Area 2 works to be completed in thirty-two (32) months; Start-up Date 5th December 2023

v  Phase III: Outstanding areas of the plant to be completed in forty-four (44) months. Start-up Date 5th December 2024

v  The overall Project cumulative planned progress is 10.7%

v  Actual cumulative progress is 6.3%

v  Contractor is to issue a mitigation plan to address this variance and to ensure that the project is completed within schedule

v  The project is financed by an equity contribution by the sponsor and Loan by Lenders (AFRIEXIM).

v  EPCIC Contract Price remain at US$1.397billion Lumpsum with US$162m  as provisional Sum bringing the total project cost to US$1.559billion as approved by FEC.

v  Advance Payment of 15% (US$194m with 70% in US dollars and 30% in Naira) has been paid to Tecnimont as a contractual requirement.

v  Advance Payment Guarantee (APG) of US$300m has been provided by Tecnimont.

v  Milestone 1 (10%) payment (US$98m and NGN17.2b) has been processed for payment.

v  The project has 14 payment milestones with deliverables attached.

Completion Challenges as Identified by the MD

v  COVID-19 with the current variant Omicron creating travel disruptions and supply chain challenges worldwide

v  East-west Road and loss of project man-hours associated with movement to and from the refinery.

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