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BUHARI’S GOVERNMENT: Limits Of Body Language (2)

By Kelvin Ebiri, Port Harcourt   |   22 November 2015   |   1:03 am  

Fuel ScarcityFIFTY years after the near moribund Port Harcourt refinery was built to take care of local consumption of petroleum products and for export, this national dream has remained illusive.

Port Harcourt, which is often described as the hub of the oil and gas industry in the country, has two refineries located between Eleme and Okrika. The old refinery was commissioned in 1965, with an initial capacity of 35,000 barrels per day. It was later expanded to 60,000 barrels per day in 1972. And the new refinery was commissioned in 1989, with an installed capacity of 150,000 per day, thus, increasing the combined crude processing capacity of the refinery to 210,000 per day.

The refinery, which can best be described as a metaphor of how Nigeria has misused its oil and gas resources, has been plagued by the failure of management to adhere to the terms of the bi-annual Turn Around Maintenance (TAM) recommended by the Japanese builders of the plant, hence, crippling the refinery.

Barely six months ago, there was a flicker of hope that the refinery might attain 70 per cent of its production capacity of 210,000 barrels, per day, before the end of September.

Not many even remember that Rivers State is host to the biggest refinery in the country. The price of petrol has skyrocketed due to non-availability of petroleum products in virtually all filling stations in Port Harcourt, its environs and other major town in Rivers state. All the filling stations along the busy Port Harcourt-Aba expressway, Ikwerre Road, Old Aba Road, East-West Road were under lock and key yesterday.

This hope was triggered by the directive of the management for first major rehabilitation in over 10 years. This target has, however, remained unrealistic due to an engineering fault in the Fluid Catalytic Cracking Unit (FCCU), which is the most critical component of the refinery, where Vacuum Gas Oil (VGO) and heavy diesel oil (HDO) are cracked to obtain more valuable products, like FCC gasoline used as PMS blend.

A source at the refinery disclosed to The Guardian that the refinery has ceased producing petroleum products, pending when the fault is fixed. He explained that total crude processed by the refinery in the month of September was 261,371.14 barrels of crude at an average capacity utilisation of 5.77 per cent.

According to the source, the failure to carry out routine turn-around-maintenance schedules that is responsible for the damage in the Fluid Catalytic Cracking (FCC) unit and rotor of the refinery.

Before the refinery recently relapsed, the Area 1, which is made up of the Crude Distillation Unit (CDU) and the Vacuum Distillation Unit (VDU), regarded as the mother unit of the refinery that produces kerosene, diesel and other feedstock for Area 2, was fully operational. The refinery had started producing kerosene and diesel. Not that, it was also producing diesel equivalent call gas circle oil which is like diesel that is blend to make complete diesel.

Equally, rehabilitation work had been completed in the Area 2, which is made up of Naphtha Hydrotreatung unit (NHU), where naphtha is hydro-desulphurised; the Catalytic Reforming Unit (CRU), responsible for upgrading naphtha to reformate, which has a higher octane value; the kero Hydrotreating Unit (KHU), where kerosene is treated to make it acceptable for aviation use.

Sources at the refinery had hinged hope for its full revival of the refinery on the commissioning of the Area 3 that is made up of a FCC, where Vacuum Gas Oil (VGO) and heavy diesel oil are cracked to obtain more valuable products PMS.

Recently, when The Guardian visited the refinery, heaps of caked crude oil removed from inside some of the equipment was stacked in several bags.

Several corroded obsolete equipment like air fill coolers, heat exchangers, pressure vessels, fired heaters, piping system, pumps and compressors, trays have been replaced with new ones.

New state of the art computers have been installed in the oil movement area unit in the control panel room. The process of replacing obsolete computers that monitors activities in the Crude Distillation Unit (CDU) and the Vacuum Distillation Unit (VDU) is about to commence.

It is important to say that the ongoing rehabilitation work at the refinery is being done mainly by Nigerian engineers following the refusal of Chiyoda Group of Japan, which built the refinery, to be involved in the rehabilitation work due to prevailing insecurity in the Niger Delta.

Chiyoda Group had recommended Maire Tecnimont of Italy for the job. The Italian firm could not proceed with the job, because the Federal Government considered the amount it demanded for the TAM as astronomical.

It is pertinent to point out that ironically, the Nigeria National Petroleum Corporation (NNPC) had imported all the equipment necessary such as different pumps, compressors, air fill coolers, heat exchangers, trays and others for the rehabilitation of the refinery, but for inexplicable reasons, the corporation abandoned these equipment at the Onne seaport for five years, not minding huge demurrage incurred.

Both Petroleum and Gas Senior Staff Association of Nigeria (PENGASSAN) and Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) have blamed government insouciance towards the maintenance of the refinery on a deliberate plot by some powerful individuals within the corridor of power to sell the refinery to their cronies.

It will be recalled that at the twilight of his administration in 2007, then President Olusegun Obasanjo, had hurriedly sold the refinery to Blue Star Oil at the price of $561 million.
The sales, which PENGASSAN and NUPENG resisted, which the late President Musa Yar’Adua reversed, was based on the fact that it was against national interest, did not challenege the government to do something about the refinery.

Other problems that have bedeviled the refinery include, inadequate operational funding, vandalisation of the pipelines that supply crude to the refinery and the government’s failure to guarantee crude supply, to enable the refinery produce petroleum products.

Another challenge that has plagued the refinery has been the issue of pipeline vandalism, which is rife within the Eleme and Okrika areas of Rivers state. As of today, there is no direct supply of crude oil to the refinery; instead, the management has resort to delivery of crude supply through vessels. A situation, which depicts how the oil industry has been irresponsibly managed for decades.

The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, while on a visit to the refinery recently, as the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), said the present administration is bent on ensuring that crude supply to the refinery through the pipelines.

He explained that by the time the refineries start operating at full capacity, they would be producing between 15 million to 20 million litres of Premium Motor Spirit, though the national consumption is within the range of between 30 million and 40 million litres. He said if he could get the refinery management to have incremental values in terms of increased production, he would be able to reduce the importation dynamics in the country.

Kachikwu said he was impressed with the energy and the effort put in by the Nigerians to revive the refineries. He added that if this had been done in the past Nigeria would not be in this sorry state. He gave assurance that the NNPC was going to manage its resources, and see how it can deliver crude and see to what needs to be done in terms of reducing contractual times to enable the refineries get the parts they need to get the refineries working.
“We’ve got to realise that these are refineries that have not been given serious maintenance for over 15 to 18 years and what I saw today was quite amazing with a lot of energy from people who are locally based here doing their to find an alternative solution. Otherwise, there would have been a very long gestation period in ordering parts for these refineries. What is important is that people are motivated and energised; they are focused. They understand my timelines that we need to get these things to work; we need to support them whichever way we can,” he said.

The General Manager of the Port Harcourt Refinery, Bafred Enjugu, said about $10 million has been spent on the rehabilitation of the refinery.
“The asking price by the original refinery builder was $297 million. The disaster with that was that they were not professionals and they were not ready to give us guarantees. What we have done so far is under $10 million. Obviously, had we consistently done this overtime, we would not have the sort of nightmare that we have had today. Whatever it takes, we are going to raise money; we are going to raise some vessels to give them what they need to run this place and run it efficiently,” he added.

Barely six months ago, there was a flicker of hope that the refinery might attain 70 per cent of its production capacity of 210,000 barrels, per day, before the end of September. This hope was triggered by the directive of the management for first major rehabilitation in over 10 years. This target has, however, remained unrealistic due to an engineering fault in the Fluid Catalytic Cracking Unit (FCCU), which is the most critical component of the refinery, where Vacuum Gas Oil (VGO) and heavy diesel oil (HDO) are cracked to obtain more valuable products, like FCC gasoline used as PMS blend.

Despite the over $10 million spent on the rehabilitation of the refinery, it has failed to address considerable local consumption needs. Ironically, in Port Harcourt at the time of writing this report, the city is faced with acute premium motor spirit scarcity as a litre of the product now sells for N400 per litre in the black market.

Not many even remember that Rivers State is host to the biggest refinery in the country. The price of petrol has skyrocketed due to non-availability of petroleum products in virtually all filling stations in Port Harcourt, its environs and other major town in Rivers state. All the filling stations along the busy Port Harcourt-Aba expressway, Ikwerre Road, Old Aba Road, East-West Road were under lock and key yesterday.

Due to the scarcity, most motorists now depend on black market dealers to fuel their vehicles. Some of the black marketers now sell ten litre of petrol for as much as N4000 yesterday and as the scarcity bites harder, there is palpable fear that price might skyrocket furthers.

Transport fares in virtually all the routes in Port Harcourt have been increased by one hundred by taxi and commercial bus drivers, who claim they buy fuel at exorbitant price from black market dealers since the major filling stations have stopped selling the products. For instance, bus fare from Mile One to Mile Three, which was prior to yesterday, N50 per drop, is now N100.
Some traders at the Mile One market told The Guardian that the price of food items are bound to skyrocket by next week if the fuel scarcity persist.



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