All Refineries Back By December, Says NNPC
•FG awards contract for repair of Chanomi pipeline
From Chika Amanze-Nwachuku in Vienna, Austria, 09.11.2007
The Federal Government has awarded a contract of $52 million for the repair of the Chanomi Creek Pipeline, the main feeder pipeline that supplies crude oil to Warri and Kaduna Refineries, which was blown up by Niger Delta militants in February last year.
Acting Group Managing Director of the Nigerian National Petroleum Corpor-ation (NNPC), Engr. Abubakar Lawal Yar’Adua, said yesterday that all refineries would be back at near full capacity when the repair is concluded by December 2007.
He disclosed this to journalists after an introductory press briefing yesterday by the Minister of State for Petroleum, Mr. Odein Ajumogobia, at the Organisation of Petroleum Exporting Countries (OPEC) Secretariat in Vienna, Austria.
The acting GMD stated that the Port Harcourt, Kaduna and Warri Refinies were all technically sound, but the Warri and Kuaduna Refineries were operating below their installed capacities because of the vandalisation of the Chanomi Creek pipeline.
He said the contract for the repair of the pipeline had been awarded to company owned by an indigene of Niger Delta as part of the strategies put in place by the Federal Government to resolve the protracted crisis in the oil-rich region.
According to him, the initial value of the contract was about $100million, but after a renegotiation with the firm, the amount was brought down to $52 million.
He assured that as soon as the repair work was completed, the refineries would be restored to normal, adding that the contractor had the technical expertise to handle the project and would complete the repairs within four months.
The GMD regretted that the issue of shortage of gas had continued to be an impediment to power supply in the country notwithstanding the over N2 billion expended on the repair of gas supply pipelines.
He attributed the shortage of gas supply to Egbin power station by the Nigerian Gas Company (NGC) to the vandalism of the supply pipe by militants, explaining that after the initial repair work, five new vandalised points were discovered.
But President Umar Musa Yar’Adua, who has been informed about the development, has directed that those points be repaired immediately, he said.
“All the refineries are technically sound. The refineries are technically ready and in good shape. Port Harcourt is operating. Today it was operating at about 60 percent capacity, we are going back to 70 to 80 percent. The Kaduna refinery was operating at 85 per cent capacity. Warri was operating until the 18th February, 2006. That was when the crude oil pipeline was vandalised. I have just got approval for the project that will repair the pipeline.
“Immediately I get back to Nigeria now, we will sign the contract. The community, Niger Delta people, have assured us of access to the place, we have evaluated the contract, we have signed agreement with the community and we expect to finish this in four months. But I am putting pressure to see if we can reduce this to three months. We are looking at the possibility of bringing the refineries back on stream maybe before the end of December to see if we can give Nigerians a Christmas present.
“What I did when I took over was to give the indigenes of the community an opportunity. It is no more Wilbros or any other big firm. It is going to the indigenes of the place. That is my strategy for resolving the situation. The firm has the technical expertise. What they will do is cut the line and weld it back to standard, that is what is required. And yes we pre-qualified them. They have been working for Shell and Mobil. We got them from the oil industry. So it is not as if we picked a group without pedigree. The value of the contract was over $100 million but I have successfully negotiated it down, with the use of the indigenes to around $52 million.
“This issue of gas which has continued to bedevil the Nigerian power sector especially supply of gas from the NGC, as a subsidiary of the NNPC to the Egbin thermal power plant, the line was vandalised by the militants and we just repaired it and restored gas supply to Egbin. We achieved this a few days ago after spending more than N2 billion. Now we have found five new vandalised points. I then had to go back to the President and he has approved that the vandalised points should be repaired. So really, the gas is available but the line is being vandalised,” he said.
He assured that gas flaring would end by 2008, adding: “The economy is on gas now. There are even independent people who want to take gas, compress it into LPG or LNG, so definitely the flaring will reduce. Not only the major oil producers, even there are independent producers… even yesterday here, around 10 people have met me that they wanted to come and invest in compressing the gas. So flaring is going to reduce considerably.”
On the steps to stem vandalism, he said what “the oil industry has tried to do is sign a surveillance contract with the communities. But you can’t be sure, you know. Even among the communities, there are factions. As I said, you just pray it will not happen again, we are trying our best to be their friends, show them that they belong and get them involved in the industry. But to say you are sure, you are guaranteed, you can’t say that.”
Earlier, the minister had explained that the National Energy Council set up by the Federal Government would review all issues affecting the refineries as contained in the Oil and Gas Reform Implementation Committee (OGIC) report.
He said his priority for now was to fix the existing refineries, adding that the need to return the existing plants to their full capacity became necessary in order to meet domestic needs.
The minister said, however, that even if the refineries were restored to full capacity, they could not refine enough products to meet the domestic needs, even as he noted that the modalities for the building of the Greenfield refineries are still sketchy.
On production shut-ins as a result of militancy in the region, he said there was a net decrease in shut-ins as, according to him, between 40 and 50 million of the shut-in 700 million barrels per day have come back on stream.
The minister is the leader of Nigerian delegates to the 145th meeting of the OPEC, which comes up today in Vienna, Austria.
