NNPC Provides Detailed Explanation for Shutdown of Nigeria's Four Refineries
The Nigerian National Petroleum Company Limited (NNPC Ltd) has offered comprehensive details regarding its decision to halt operations at all four of Nigeria's government-owned refineries. This move, which has been in effect for several months, represents a significant shift in the country's petroleum sector strategy.
Reasons Behind the Refinery Closures
Speaking during the sidelines of the 9th Nigeria International Energy Summit (NIES 2026), Bayo Ojulari, the Group Chief Executive Officer of NNPC Ltd, outlined multiple factors that necessitated the shutdown. The primary reasons include:
- Persistent commercial losses that were draining national resources
- Low utilization rates where refineries operated at only 50-55% capacity
- Rising operating costs that made continued operations unsustainable
- Poor quality of refined products despite significant investment
Ojulari emphasized that the refineries had become commercially unviable in their current condition, describing the situation as "running at a monumental loss to Nigeria" and essentially wasting money that could be better utilized elsewhere in the economy.
Refinery Capacities and Operational Challenges
Nigeria's four refineries consist of two facilities in Port Harcourt, one in Warri, and one in Kaduna, with a combined installed capacity of 445,000 barrels per day (bpd). Specifically:
- Port Harcourt refineries: 210,000 bpd combined capacity
- Warri refinery: 125,000 bpd capacity
- Kaduna refinery: 110,000 bpd capacity
Despite this substantial capacity, Ojulari revealed that NNPC was pumping crude cargoes into the refineries every month, but only about half of those volumes were effectively utilized. This inefficiency created significant waste and value leakage, with heavy spending on operations and contractors failing to translate into positive returns.
Strategic Shift Toward Sustainable Solutions
The NNPC chief explained that the decision to halt operations was aimed at preventing further financial hemorrhage while reassessing options for the refineries' future. According to Ojulari, there was no clear path to profitability under the existing operational structure, necessitating a fundamental rethinking of the refineries' management and ownership models.
Looking forward, NNPC is considering releasing parts of its equity in the refineries to attract long-term global investors. Ojulari stressed that this approach would not constitute selling Nigeria's assets but rather opening doors to strategic partnerships that could bring technical expertise and financial resources.
"Our solution is to put a sustainable structure in place where the refineries can finance themselves and operate like proper businesses," Ojulari stated, indicating a shift toward more commercially viable models for Nigeria's refining sector.
Context Within Nigeria's Energy Landscape
This development occurs against the backdrop of Nigeria's broader energy transformation. The Dangote Refinery, which recently began operations, is set to expand from its current 650,000 barrels per day capacity to 1.4 million bpd within three years, potentially becoming the world's largest refinery. This private sector initiative aims to address Africa's growing fuel demand, reduce dependence on imports, and create substantial employment opportunities.
The NNPC's decision to shutter the state-owned refineries represents a pragmatic acknowledgment that previous operational models were unsustainable. By seeking strategic partnerships and potentially restructuring ownership, Nigeria aims to transform its refining sector from a financial burden into a commercially viable component of its energy infrastructure.
