Nigeria’s refining landscape is edging towards another pivotal shift as the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) declares that the old Port Harcourt Refinery is technically ready to resume operations within one week.
The disclosure, made by PENGASSAN President Festus Osifo on Channels Television’s The Morning Brief, comes amid renewed scrutiny of Nigeria’s state-owned refineries and their place in an increasingly competitive downstream market.
While the plant appears mechanically ready, the final decision now rests with the Nigerian National Petroleum Company Limited (NNPC Ltd), which must weigh operational restart against commercial sustainability.
90% Rehabilitation Completed
Osifo disclosed that engineers have rehabilitated the 60,000 barrels-per-day old Port Harcourt refinery to about 90 per cent of its capacity. He added that they have replaced or upgraded critical infrastructure, including compressors, control systems and instrumentation panels.
“As of today, you can start the old Port Harcourt refinery and it will function,” he said. “If NNPCL decides to turn it on, within the next week it can come back to life.”
Industry observers note that mechanical completion typically signals readiness for commissioning and test runs. In refining operations, this stage confirms that major rotating equipment, process units and safety systems are structurally sound.
After years of operational dormancy, the refinery is now undergoing restoration to boost throughput efficiency and cut Nigeria’s reliance on imported refined petroleum products.
Profitability Remains Key Hurdle
However, Osifo acknowledged that the delay in restarting the refinery is not due to mechanical setbacks but commercial considerations.
In refining economics, profitability hinges on the margin between crude feedstock costs and the market value of refined products. If crude oil input costs exceed the revenue generated from petrol, diesel and other outputs, the refinery operates at a deficit.
“If you feed crude oil worth five million dollars into the refinery and recover products worth about 4.5 million dollars, you are already at a loss,” Osifo explained.
With crude prices benchmarked to international markets and product pricing influenced by exchange rate pressures and domestic supply dynamics, NNPC Ltd must carefully assess the refinery’s gross refining margin before approving restart.
The Petroleum Industry Act (PIA) places the company under a commercial mandate, and management prioritises shareholder value and enforces strict financial discipline.
Strategic Significance in a Changing Market
Despite concerns about immediate returns, Osifo insisted that the rehabilitation investment was not wasted. He stressed that the refinery’s asset value has improved significantly compared to its pre-rehabilitation state.
Beyond balance sheet considerations, analysts argue that restarting the Port Harcourt Refinery could strengthen supply security, create jobs and deepen Nigeria’s refining resilience especially as private sector capacity expands.
Yet the broader question remains: in a post-import dependency era shaped by new domestic refining capacity, should state-owned refineries compete purely on commercial terms?
The coming days may provide clarity. For now, the Port Harcourt Refinery stands ready technically restored, economically scrutinised and strategically positioned at the centre of Nigeria’s evolving energy narrative.