Bayo Ojulari, chief executive officer (CEO) of the Nigerian National Petroleum Company (NNPC) Limited, says state-owned refineries have failed to work in Nigeria because too much attention was placed on financing and engineering, procurement and construction (EPC), rather than on long-term operations.
Speaking at the just-concluded Nigerian International Energy Summit (NIES), Ojulari said the refineries failed largely because operators did not focus on running the facilities after construction.
“The reason our refineries have not worked is that we are focused on the first two: EPC and financing. Anybody who wants to do the financing will get value for it,” he said.
“The person financing is not financing you for free. They are financing you for margins and profitability. The EPC contractors do their work, get paid, and move on.
“You, as NNPC, are left for the next 20 to 40 years to run those refineries. And we’ve never really focused on that.”
Ojulari said there had been extensive discussions around operations and maintenance (O&M), noting that globally, effective O&M requires a strong operational excellence team.
Without such a structure, he said, resources are often wasted.
“Then again, O&M is another contract. So you end up with financing, EPC, and O&M all taking money from the system without any skin in the game,” Ojulari said.
“There’s no way you can sustain any business like that. It’s very clear. The system was designed for taking, not to put anything in.”
He added that the current NNPC leadership has decided to focus on the missing operational component.
“For those of us who spent years building multi-billion-dollar facilities for international oil companies (IOCs), we understand these principles. From the day you start a project, you appoint an operational assurance person to ensure whatever you deliver can be operated efficiently,” he said.
Ojulari recalled his experience working with Shell, where he was part of the commissioning team for the Qatargas project.
“From the beginning, during the project phase, I was part of the operations readiness team. We conducted audits even before construction began and again when construction was about 90 percent complete,” he said.
According to him, issues identified during those audits explained why operability could become a challenge if not addressed early.
“You then put in the capability, training, and resources needed to operate. For most mega-projects, you spend two to three years planning, three to five years constructing, and then operate for 25 to 50 years. So where should your focus be?” he asked.
Ojulari added that NNPC had previously handled these critical operational issues with kid gloves.
He also disclosed that the company is in talks with a Chinese firm over a potential partnership on one of Nigeria’s state-owned refineries.
