Mele Kyari: How Poor Maintenance Culture Crippled Nigeria’s Refineries

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A worker walks past oil pipes at a refinery in Wuhan, Hubei province March 23, 2012. REUTERS/Stringer/File Photo

The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mr. Mele Kyari, has blamed the moribund state of the country’s refineries on lack of proper maintenance of the facilities over the years.

He acknowledged that Nigeria has one of the highest numbers of technicians in the petroleum sector in the world, but added that the experts have not been adequately engaged.

The NNPC boss said this revelation yesterday when he appeared before the House of Representatives Committee on Petroleum (Upstream) in Abuja.
Answering a question on the technical capacity of the NNPC to properly manage oil exploration, refinery and sales, the NNPC boss admitted that there was enough manpower in the petroleum to develop the industry but that the experts had not been properly engaged.

“The oil industry is a technology-based industry and this technology evolves everyday. I can assure that in the entire global oil and gas industry, there is nowhere you would have gone that you would not find a skilled Nigerian working in the oil and gas industry. And indeed, we are probably the largest contributor to skilled manpower in the industry of all the black nations of the world.

“Today in the industry, over 90 per cent of the technical personnel are sourced locally; they are run by Nigerians. There is really no paucity of such capacity. What is true is that engagement of these people has not been optimised. And this is what we need to work with the Nigerian Content Development Board, to make sure that certain skills that come up from time to time on need basis are provided for, so that this industry continues to grow.

“Let me address the issue of refineries: the refineries didn’t fail because there were no skills, they failed because we are unable to take care of the refineries. And we don’t have to give excuses why we didn’t take care of them. We can blame anyone. But what we have decided to do is to make them work. There is no scarcity of skilled people.

“The will is there today and our plan is to get them to work. And I assure you that the plans we have in place will deliver these refineries. There is no issue around absence of skills, we have the best refiners in the world; anywhere you go in the world, they will attest to it that we have the best refiners who are Africans in this country.”
Also following the recent discovery of oil in the Gongola basin, Mele Kyari further revealed that there are high prospects of oil discovery in Benue, Bida and Chad Basins.

He said that while it was very true that Nigeria is very expansive oil and gas province, it is also true that the production targets have not materialised over the years.
Kyari stated: “Indeed the national target of three million bpd and 40 million barrels of reserves have not been attained. What I can assure you Mr. Chairman, is that we are very focused today, we know this is possible, we are taking steps to realise this before the end of 2023 which is possible.

“A number of interventions are ongoing currently including our elaborate intrusion into the frontier basins which the chairman is aware that we just announced the oil discovery in the Gongola basin.

“We expect many more to happen in some parts of the Benue trough, including Chad basin and Bida basin. All these are possible, we have very good prospects and we know that the possibility of having attaining 40 million reserves is very possible.”
On increasing the production, Kyari said that NNPC was taking critical steps, but added that there are part of it that needs legislative intervention.

He noted that since 2007, there had been no significant investment decision in the sector, adding that the highest that was done was an investment of about $500 million.
“That means there is something responsible for this, one of them is fiscal clarity. As you are aware, effort to bring petroleum legislation on the table has not materialised and I know today that this Assembly is very determined to ensure that the petroleum legislation is put in place”.

He stressed the need to address the issue for fiscal stability because investors must be convinced that the fiscal laws must be stable, noting that resolving the issue of fiscal legislation would be an appropriate step towards getting partners to invest in the country.
Kyari added that there are issues around security across the areas of operations, which he said had hindered some interventions in some of the onshore assets.

He, however, revealed that there is ongoing engagement by the security agencies in collaboration with industry stakeholders particularly the NNPC to make sure that those security issues are resolved.

The NNPC boss noted it was also true that presently, there is a ‘strong stealing of crude oil going on’, but he assured that there are ongoing effort to stop it, adding that within the record time, it would be contained which would lead to incremental value in production number that we have
As a result of this intervention, Kyari said last week, production hit close to 2.8 million bpd, stressing that the country has not been able to reach that for the past two years.

He therefore urged the committee to sort out the issue of legislation, saying that without sorting out the issue of legislation, every intervention the House intends to make would amount to nothing.
Kyari explained that no investor would invest his money and put into upstream operation if he was not sure of getting back his money or what returns he is going to get.

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Godwin Okafor is a Financial Journalist, Internet Social Entrepreneur and Founder of Naija247news Media Limited. He has over 16 years experience in financial journalism. His experience cuts across traditional and digital media. He started his journalism career at Business Day, Nigeria and founded Naija247news Media in 2010. Godwin holds a Bachelors degree in Industrial Relations and Personnel Management from the Lagos State University, Ojo, Lagos. He is an alumni of Lagos Business School and a Fellow of the University of Pennsylvania (Wharton Seminar for Business Journalists). Over the years, he has won a number of journalism awards. Godwin is the chairman of Emmerich Resources Limited, the publisher of Naija247news.

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