Despite official claims that Nigeria’s newly refurbished refineries were making profits and helping to combat fuel scarcity, SaharaReporters has learned that the Warri refinery in Delta State remains a drainpipe, a symbol of the rot in Nigeria’s opaque and shady oil sector.
Less than two weeks after President Muhammadu Buhari appointed Ibe Kachikwu as the new Group Managing Director for the Nigerian National Petroleum Corporation (NNPC), the debt-riddled Warri refinery is reportedly close to being shutdown. SaharaReporters has obtained two daily reports about the operations of the Warri refinery. The grim reports indicate that the refinery operates at a huge loss that could cost the Nigerian government close to N1.2 trillion per year.
The documents reveal that the refinery barely produces 2.3 million liters of gasoline, a mere drop in the bucket compared to the 50 million liters required to daily fuel consumption across Nigeria.
The refinery processes about 11,865 metric tonnes of crude oil. The crude is supplied via trucks and vessels instead of through pipelines, which remain significantly damaged due to the activities of armed militants in the Niger Delta region. The reports obtained by our correspondent also disclosed that several units for processing crude at the Warri facility were currently shutdown.
Part of the report revealed that, on August 11, 2015, a vessel MT Bade offloaded more than 1,200 metric tonnes of imported fuel at the refinery to supplement the facility’s low production output.
Part of the report showed that one pipeline for pumping diesel from the refinery had been shut down because of vandalization at Adeje, Delta State. Pipeline ‘2C’ was also shut down, with a crude oil supply source called Escravos Line remained suspended. A huge crude oil supply line, UQCC, which is supposed to be protected by ex-militant commander, Government Ekpemupolo (alias Tompolo) also remained suspended.
Ex-President Goodluck Jonathan and former Petroleum Minister, Diezani Alison Madueke, gave approval for Ocean Marine Tankers (OMT) Limited, founded by Captain Hosa Okunbor, Tunde Ayeni and Mr. Ekpemupolo (Tompolo), to take over delivery of crude to Warri Refinery.
“It beats my imagination that, despite being paid millions of dollars for pipeline surveillance and protection, Tompolo and other Niger Delta militants have not been able to restore pipeline sources to the refinery. Tompolo is being paid by the NNPC to safeguard pipelines that are currently not delivering crude to the [Warri] refinery.
We are thus forced to rely on trucks to deliver crude for refining and for delivering final products,” one engineer at the refinery told our correspondent.
The Rapele-Warri pipeline also remains suspended. As a result, it costs the government $2 million per month to transport crude from Escravos to the refinery. “The management of the refinery spends $66,000 per day to transport crude for refining,” one source said.
The management of Warri Refinery is paid subsidy of N34 per liter of fuel produced at the facility.
A second report obtained dated August 18 2015 by SaharaReporters showed that the Warri refinery had shut down its Crude Distillation Unit (CDU). The CDU is the first stop in the processing of crude and is the refinery’s main distillation unit and engine room. “Once the CDU is down, technically the refinery is down,” said one inside source.
Other dysfunctional units at the refinery include the Vacuum Distillation Unit (VDU) and the Fluid Catalytic Cracking Unit (FCCU). An engineer disclosed that technicians at the facility had tried for more than one week to start up the FCCU without success. “The FCCU is the unit that increases the yield of premium motor spirit,” he said. “If it’s working, the refinery should be able to produce an additional two million liters of gasoline per day.”
Two sources in the oil sector told SaharaReporters that no single repair had been done in a long time by the refinery’s management. “That’s why it is producing at loss,” one source said.
Our sources stated that the crisis-prone Warri facility currently has 30,948 cubic meters of crude oil available for processing, with the quantity due to last for a mere 2.6 days. A vessel, Mt African Beauty, berthed on August 17 to discharge 15,000 cubic meters of crude which will also last for an additional day. As at press time, SaharaReporters learned that 9,925 of the vessel’s shipment had been discharged.
The refinery’s technical problems have a long history, our inside sources said. They claimed that budgets for the repairs of the Warri Refinery provided fodder for “repair scams” that benefited some NNPC officials. “When President Buhari came to office, the refinery was not repaired, but was just cranked up to impress him that the refinery is in good condition. But the reality is dawning on everybody that the refinery is close to being shut down completely.”