The CEO of Nigeria’s NNPC has announced that discussions are underway with a Chinese company regarding a refinery

The chief executive of Nigeria’s NNPC announced on Wednesday that discussions are underway with a Chinese company regarding one of the state-owned oil firm’s refineries.

Bayo Ojulari, the chief executive of NNPC, stated that the company is looking for seasoned operators to join as equity partners in order to rejuvenate its four refineries, which have faced years of losses and underperformance.

He stated that an internal review conducted soon after he took on his role last April revealed that the refineries were operating at significant losses, characterized by elevated operating costs and substantial expenditures on contractors, all while processing volumes stayed low.

The board of NNPC has sanctioned a strategy to engage refinery operators with established expertise instead of contractors, as stated by Ojulari, who also mentioned that the company is in advanced discussions with multiple interested parties. “I’ve just returned from a meeting with one of the potential investors,” Ojulari remarked, refraining from disclosing any names. They will be visiting the refinery tomorrow for an inspection. It is a Chinese company that operates one of the largest petrochemical plants in China.

Nigeria has faced ongoing challenges in rehabilitating its aging refineries, which have consistently operated at significantly reduced capacity, compelling Africa’s largest crude oil producer to depend largely on imported fuel. The government anticipates that new partnerships will contribute to reversing that trend.

Ojulari stated that the plants have been paused to provide an opportunity to evaluate options for their restoration, aligning with the launch of Dangote Refinery, which has provided “breathing space” for the domestic fuel supply.

He stated that NNPC was not selling the refineries, but would transfer a portion of their equity to partners to allow the plants to self-finance their operations.