All articles in the Refining Gap Section:

By Dimeji Bassir

Transparency seems to be replacing obfuscation at NNPC following the recent leadership change — a move driven by a bold reform agenda from Nigeria’s President. The new team certainly has their work cut out for them, and NNPC could not be in more experienced hands. The incoming Group CEO, a highly respected upstream professional, has hit the ground running and assembled a strong team to help execute his first 100-day plan — a comprehensive value assessment of the business to pinpoint gaps between its current baseline and its full potential.

The new leadership were handed bold mandates which are to:

1. Sustain base production and deliver incremental barrels
2. Increase gas capacity utilization and attract strategic investments
3. Deepen refining capacity and expand CNG penetration
4. Enhance Liquidity and become a global brand.

But there’s a snag. Mr. Ojulari was a technical expert before transitioning into management — a path that eventually saw him lead Shell’s Nigerian deepwater operations. In his new role at NNPC, it’s reasonable to expect that his network of subject matter experts will be extensive, but predominantly made up of upstream talent.

Expanding refining capacity in Nigeria is a bold, ambitious — yet necessary — objective, given its huge social implications for ordinary Nigerians. However, a  lack of deep domain expertise, ingrained cultural inefficiencies and chronic corruption have kept the refineries trapped in a persistent cycle of underperformance.

Following a much-publicized $3Billion “revamp,” the four government run refineries remain completely non-operational — exposing the effort as little more than a costly charade while a teeming population yearning for refined products remain underserved.

The Dangote Refinery has somewhat eased some pressure on the sector but PMS availability at NNPC retail stations remained a dismal 54% in April 2025, according to NNPC Limited’s own monthly report.

The same report indicated that the Port Harcourt, Warri and Kanduna refineries were currently under review but what exactly does that mean?

Driving sustainable change in the sector will require a much broader base of expertise and thoughtful intervention if there’s to be any meaningful impact.  

The Fundamentals

A refinery’s utilization drives throughput and is also positively correlated with profitability.

Utilization is defined as the ratio of a facility’s actual output to its nameplate capacity — the maximum output it could achieve if operating at 100% throughput continuously. For refiners, the worst-case scenario occurs when utilization is low but reliability spending remains high — meaning significant resources are being spent to deliver subpar performance. Conversely, the ideal scenario is high utilization with minimal reliability costs.

Unfortunately, Nigeria remains firmly stuck in the worst-case scenario: between 2010 and 2018, the country’s four refineries operated at an average utilization rate of just 15%, while over $25Billion was spent on repairs and maintenance in the 13 years leading up to 2023. Unsurprisingly, the Port Harcourt Refining Company posted five consecutive years of losses between 2013 and 2018, amounting to over ₦200Billion—a significant blow to the plant’s valuation, particularly if the widely debated option of selling the asset were to be considered.

“ As goes asset availability, so goes the business “.

It’s clear that there is no viable business ongoing at NNPC’s four refineries, especially in the wake of yet another failed revamp effort.

A lingering debt overhang from the loans secured in 2021 to finance the latest round of refinery “revamps”—loans expected to be repaid from the proceeds of refined product sales—further complicates an already dire situation, especially with the refineries still non-operational.

Sometimes the way forward is a U-turn

Optimization of plant asset performance and reliability is essential to meeting the challenge of increasing production and lowering costs by asset intensive organizations. Successful plant asset optimization requires the strategic integration of proven technologies, maintenance best practices, and reliability methodologies in a coordinated, sustainable programme that includes culture change.

As recently as a decade ago, there was little industry consensus among experts on what constituted effective asset availability practices in maintenance and reliability. If you asked about the traits of top performers—those who had successfully improved the operational performance of physical assets while reducing overall production and maintenance costs—you’d likely receive different answers depending on whom you asked. Fortunately, that has changed. Today, there is far greater awareness at the executive level, along with clear, consistent guidance from top performers and broad agreement among industry experts on the proven patterns of excellence.

The top priority for the Bayo Ojulari–commissioned task force, charged with unlocking value from NNPC Limited’s downstream assets, is to pause all current activities and conduct a comprehensive and structured assessment followed by an implementation (gap closure) plan at all four plants. This exercise must be led by individuals with deep expertise in the proven methodologies that drive high performance consistently.

The purpose of the Assessment and Implementation Plan is to provide NNPCL leadership with a reliable account of the current state of asset availability at each refinery and to assist in the development of a plan to implement best practice operations, maintenance, and reliability programs. The Assessment seeks to identify gaps, which, if closed properly, would result in substantial financial, and business benefits, including maintenance spend and inventory reductions, increase in asset availability, utilization and product yield, amounting to significant annual sustained benefits.

It illuminates at the corporate executive suite level, the contribution to financial and business performance improvements that can come from improved levels of physical asset reliability.

The Gap Analysis comprehensively evaluates current operations, maintenance and organizational practices relative to world-class performance in the following general areas:

• • • • • • • • • • Facility Management
            • Work Management
            • Material Management
            • Information Management
            • Management Support
            • Engineering Information Management

These areas are further subdivided into the following subcategories:

• Organizational Structure
• Policies & Procedures
• Facility Programs
• Facility Material Condition
• Planning & Scheduling
• Work Control
• Maintenance Procedures
• Post Maintenance Testing
• Procurement
• Warehousing
• Maintenance History
• CMMS Availability / Effectiveness
• Management Involvement
• Corporate Support
• Engineering Information
• Problem / Trouble Analysis

A key deliverable for the team tasked with unlocking value from NNPC-owned refineries is to produce a value and cost optimization report, along with clear, actionable recommendations for the way forward. Achieving this goal for the new CEO, and by extension, the President, requires a paradigm shift. One rooted in a cultural reawakening and deep self-awareness of the critical knowledge gaps that continue to hinder not just the organization, but the country as a whole.

By Marshal Gungubele, in Abidjan

African Export-Import Bank has launched a $3 Billion Revolving Intra-African Oil Trade Financing Programme to finance the purchase of refined petroleum products by African and Caribbean oil buyers.

The financing is to stimulate demand of petroleum products by African countries with no crude oil development and/or refining capacity, from African countries with growing refining capacity.

South Africa, for one, is a crude oil starved country which imports billions of dollars’ worth of petroleum products, but most of its import is from outside Africa.

The eligible exporters in the Afreximbank scheme  are refineries operating in Africa. Key products to be traded under the programme are refined petroleum products including but not limited to Premium Motor Spirit (PMS), Automotive Gas Oil (AGO), Heavy Fuel Oil (HFO), Jet Fuel, and Kerosene.

“As a revolving facility, we expect it to finance about $10Billion to $14Billion of Intra-African petroleum imports”, the pan continental lender said in a release.  “This programme seeks to leverage the growing refining capacity that Afreximbank has helped establish across the continent, while aligning with the objectives of the African Continental Free Trade Area (AfCFTA) agreement, which includes facilitating intra-African trade, promoting industrialisation, and creating jobs on the continent”.

The $3Billion Revolving Intra-African Oil Import Financing Programme is intended to mainly provide critical trade finance to oil traders (both African and international), banks, and Governments – represented by their Ministry of Finance or Ministry of Petroleum Resources/Energy – and state-owned enterprises mandated to import refined petroleum products, who seek to source refined products from African Refineries for onward consumption within the continent and export opportunities as may be applicable. Afreximbank, affiliated trading entity ATDC Minerals (ATMIN) will also participate actively in the trading and financing activities of the leading African oil trading companies with long term relationship with Afreximbank who are also expected to support this effort.

The bank noted that this financing initiative supports its strategic goals of advancing energy security, by deploying innovative trade finance and supply chain solutions tailored to key stakeholders’ needs in terms of tenure, price format and logistics requirements. It also strengthens regional value chains, and fostering economic resilience within the continent and the Caribbean.

At the Africa Energy Week in Cape Town in November 2024, Benedith Oramah, Afreximbank’s Chief Executive Officer, declared that “instead of revelling in the misguided euphoria of being major crude oil exporters, we must now work to turn the continent into a massive refining hub and use  that to also build a solid petrochemical industrial base to boost Africa’s manufacturing, create jobs and raise GDP and export revenues”.

Afreximbank claims that it is the largest financier of the Dangote refinery which commenced operations in January 2024 and is also supporting the financing of the 200,000Barrels of Oil Per Day (BPD) Lobito Refinery development, building on the progress made on the 60,000BPD Cabinda Refinery, which it also supported. In addition, the Bank has financed the refurbishment of the 210,000BPD Port Harcourt Refinery, and recently approved financing in support of the development of Bua Refinery and Azikel Refinery, all in Nigeria.

“Through these investments, and the continual trade finance support for Société Ivoirienne de Raffinage (SIR), Cote d’Ivoire, Afreximbank is on its way to creating over 1.3MillionBPD refining capacity and helping to convert the Gulf of Guinea from an exporter of crude oil into an important refining hub for the continent and the world”, the bank explained.

The Ugandan government has now signed an Implementation agreement with UAE investment firm, Alpha MBM Investments LLC, which increases the certainty of construction of the long stalled 60,000-barrel-per-day crude oil refinery than any previous transaction.

It is the culmination of a 15 month long negotiations, commencing on January 16, 2024, on key commercial terms with Alpha MBM Investments.

The transaction, inked at the State House, Entebbe on March 29, 2025 in the presence of President Yoweri Museveni, updates the Memorandum of Understanding (MoU) signed on December 22, 2023, between the government and Alpha MBM, outlining cooperation and negotiation terms for the Refinery Project. The deal calls for Uganda National Oil Company (UNOC) to take a 40% stake in the project with Alpha MBM Investments LLC holding 60%. The signatures pave the way for the project’s construction phase, expected to commence sometime before the fourth quarter of 2025.

The facility, to be sited in Kabaale, Hoima District, has been on the drawing board since commercially sized crude oil reserves were discovered in the land locked, East African country in the late 2000s.

. “I want to thank His Highness Sheikh Mohammed Bin Maktoum and our friends from the UAE for their commitment to investing in Uganda,” President Museveni said.

Alpha MBM replaced the Albertine Graben Energy Consortium (AGEC)  as the project’s  strategic investor in late 2023. AGEC’s Project Framework Agreement (PFA) was refused extension after it expired in June 2023 for lacking a sense of urgency. Afterwards, President Museveni asked the Ministry of Energy and Mineral Development to conduct a new search for a new lead investor. Alpha MBM showed up in the search process. Four investment groups expressed interest out of which Alpha MBM was successful.

The refinery project will include a modern storage terminal in Namwabula, Mpigi District, ensuring adequate fuel reserves for national consumption. The facility also includes a 212kilometre multi-product pipeline, linking the refinery to the storage terminal, guaranteeing efficient transportation of refined products across Uganda and beyond and the Mbegu water abstraction facility, equipped with an advanced water pipeline system to support refinery operations and ensure sustainability.

By Bill Blain

The Atlantic Age may be crumbling in a Trumpian cataclysm of lies and disinformation but it’s time for a really positive, forward-looking story on the place international business cooperation in human progress.

A Landmark Framework Agreement was signed at the EGYPES Energy conference in Cairo, to construct a First-of-Its-Kind Petrochemical Complex. The $7Billion plant will be located in the New Alamein Industrial Zone close to the Mediterranean, West of the Nile Delta.

It’s a great example of what’s possible in what I call the day job – private capital markets. It also points towards the emergence of a new the “Middle Sea” economy – the Mediterranean littoral nations becoming a driver of global trade triangle between Europe, Africa and the Middle East, which will be a critical pathway for trade with Asia.

“The complex will utilize crude oil as feedstock, integrating refinery and mixed steam cracker technologies to achieve one of the highest global conversion rates producing premium petrochemical products – which have already effectively been presold to off-takers, primarily in the emerging “Middle Sea” growth economy“

Over the years we’ve been working on the deal I’ve been repeatedly told no-one would fund an oil-based petrochemicals plant because of ESG concerns. Not so. We may see the global economy electrify, but there will always be demand for oil-and-gas derived paints, glues, packaging, man-made rubbers and the 1001 other plastic based materials modern societies require.

Together with colleagues in Cairo we’ve spent a number of years ‘crafting” this deal, creating a robust transaction that is “oven-ready” to finance and construct. (We will be raising a further $4.6 Billion to complete construction.) To get the project this far we’ve attracted substantial support from across the oil and petrochemical sectors, bringing together best-in-class multi-discipline partners in engineering, construction, technology, logistics, finance and legal.

Over multiple visits I’ve grown to love Cairo – it’s a fascinating place – and She-Who-Is-Mrs-Blain, (who has a masters-degree in Archaeology), has been using our companion vouchers to visit tombs, mummies, museums and markets.)

“This project is unique as it’s an entirely private sector led development backed by British, Emirati, and Saudi investors. There is strong government support behind what we seek to construct, but zero Egyptian government involvement or control. They agree with us that sound corporate governance, robust anti-corruption barriers, and private sector operating efficiency, will establish precedent for international private enterprise to come to Egypt to drive growth in the economy.”

We’ve attracted support right from the very top in Eqypt. The agreement was signed with the Egyptian Ministry of Petroleum and the Ministry of Investment in the presence of the Prime Minister, His Excellency Mostafa Madbouly and the British Ambassador to Egypt, Gareth Bayley. The support of the Prime Minister and the Petroleum and Mineral Resources Minister, Eng. Karim Badwai, has been absolutely pivotal to moving it towards completion.

However, nearly all infrastructure deals in Egypt (and across emerging economies) are done with elements of government-to-business and government-to-government involvement.  Transactions involving G2B can become overly “bureaucratic”, and in some jurisdictions Government oversight can make them vulnerable to corruption.

This project is unique as it’s an entirely private sector led development backed by British, Emirati, and Saudi investors. There is strong government support behind what we seek to construct, but zero Egyptian government involvement or control. They agree with us that sound corporate governance, robust anti-corruption barriers, and private sector operating efficiency, will establish precedent for international private enterprise to come to Egypt to drive growth in the economy. The Egyptian government like the concept so much they’ve agreed to give the project considerable tax advantages to launch in the new Alamein economic zone.

Traditional infrastructure funders will typically want to see government construction and trade guarantees for such projects – this is not a deal for such investors. This transaction takes an “Alternatives” corporate approach to financing – raising funds from sophisticated institutional investors on the strength of the underlying business, based on sound corporate governance, sustainability, CGR and choosing the best partners in terms of the construction, design and technologies to mitigate risks, and a focus on margin, returns and results. The project will throw off reliable double-digit returns for the Equity LPs.

The complex will utilize crude oil as feedstock, integrating refinery and mixed steam cracker technologies to achieve one of the highest global conversion rates producing premium petrochemical products – which have already effectively been presold to off-takers, primarily in the emerging “Middle Sea” growth economy, with much of the production expected to go to Turkey and Southern Europe. We have analysed the markets and pricing outlook in these products to optimise the design of the plant and maximise returns.

The plant will play a crucial role stimulating Egyptian economic growth and global market competitiveness, engaging local and international contracts, creating some 20,000 jobs in construction and 3000 skilled-roles through the plant’s life cycle. These will all generate significant economic growth multiplier effects while boosting trade with product off-takers around the Med and globally, boosting Egypt’s position as an entrepot between East and West.

The refinery complex will implement cutting-edge technology, including licensed solutions from Honeywell and other leading global partners, to ensure unrivalled efficiency and sustainability. As part of our ESG strategy, we will be using advanced energy-efficient technologies to minimize environmental impact, reduce carbon emissions, and enhance sustainability while maximizing industrial output.

From a financing perspective, the Project is an excellent example of how Private Capital Markets can be employed to generate strong, risk-mitigated returns for investors from complex transactions. Deals may not be as liquid as public markets, but they tend to provide investors with improved returns and greater transparency as most deals are done on a fully negotiated basis.

Using a GP/LP structure we will be funding the construction though a mix of private equity and private credit (debt). The detailed financial model we’ve built around the project demonstrates how risks and returns have been carefully identified and addressed, giving equity investors reassurance on returns, and debt investors reliable information to their interest and principal will be paid in a timely manner. The returns the project creates are substantial and justifiable.

Naturally my colleagues and I will be more than happy to talk to potential investors – although I stress this is institutional only. We expect to move through the swift completion of the conditions precedent and all relevant construction and market studies to reach financial closure during 2026.. which means we want to be talking to potential investors… now.

Out of time, and back to the day job…

Bill Blain, partner, Shard Capital and founder, Windshift Capital, is  author of the Morning Porridge

By Marshal Gungubele, in Warri

Nigeria’s state hydrocarbon company NNPC Ltd’s three refinery complexes, currently undergoing turn around maintenance (TAM), will not be producing diesel with sulphur content less than 1,500parts per million (1,500ppm) when they are commissioned.

This is way above the quantity of sulphur content in the regulation, even for local refiners.

The government run crude oil processing plants, located in Port Harcourt (in eastern Nigeria), Warri (in mid-western Nigeria) and Kaduna (in the country’s north), have been undergoing a revamp, starting with the Port Harcourt complex, since 2021. Commissioning hitches have reportedly held the smaller (60,000Barrels Per Stream Day) of the two refineries in the Port Harcourt complex from coming on stream. Revamp of the (150,000BPSD) bigger facility  is not expected to be ready to work until 1^st Quarter 2025.

NNPC sources argue that the rehabilitation  was to bring the facilities back to work and not to introduce any technology process that wasn’t there in the first place. “The Turn  Around Maintenance has been to simply restore the processing plants to optimum performance, and not to introduce processes that were not in the plants before the TAM”, NNPC sources tell Africa Oil+Gas Report. “What we have done is like for like”.

In line with Nigeria’s agreement with other member countries of the Economic Community for West African States (ECOWAS), which is in consonance with Nigeria’s Petroleum Industry Act (PIA), the roadmap by the Nigerian Midstream & Downstream Petroleum Regulatory Authority (NMDPRA) says that local refiners can produce diesel with 650 to 1,200ppm sulphur content until December 2024. But the rule also says that importers cannot bring in diesel with sulphur content of more than 650ppm.

The incentive for local refiners over importers is to compensate them for having invested in in-country production, and they should recoup their investment. NMDPRA will gradually move importers to 50ppm by June 2025. That is the policy, at least on paper.

This article was originally published in the July 2024 edition of Africa Oil+Gas Report monthly.