KEY POINTS
- Ojulari says Nigeria’s refineries failed because past efforts focused on financing and EPC contracts, not long-term operations.
- Weak operations and maintenance structures allowed contractors to profit without committing to refinery sustainability.
- The current NNPC leadership is shifting strategy to prioritise operational readiness and long-term refinery performance.
Bayo Ojulari, Chief Executive Officer of the Nigerian National Petroleum Company, NNPC, Limited, has attributed the persistent failure of Nigeria’s state-owned refineries to an overemphasis on financing and engineering, procurement and construction (EPC) contracts, rather than on long-term operations.
Speaking at the recently concluded Nigerian International Energy Summit (NIES), Ojulari said successive refinery projects prioritised securing funding and awarding construction contracts, while neglecting the crucial task of running and sustaining the facilities after completion.
According to him, financiers and EPC contractors are primarily driven by profit margins. Once construction is completed and payments made, they exit the project, leaving NNPC with the responsibility of operating the refineries for decades without adequate preparation.
Weak Operations and Maintenance Framework in NNPC
Ojulari explained that although operations and maintenance (O&M) have often been discussed, the approach adopted in the past was flawed. Globally, he noted, effective O&M requires a strong operational excellence team that takes ownership of refinery performance.
Instead, Nigeria’s model relied on multiple contracts financing, EPC and O&M, all drawing funds from the system without having any long-term commitment to the success of the facilities.
“You end up with all of them taking money from the system without any skin in the game,” he said, adding that such a structure was unsustainable and designed more for extraction than for value creation.
Drawing from his experience working with international oil companies, particularly Shell, Ojulari stressed the importance of embedding operational readiness from the very start of a project.
He explained that in major global projects, an operational assurance team is appointed at the inception stage to ensure that whatever is built can be efficiently operated over its lifespan. This includes early audits, staff training, capability development and resource planning long before construction is completed.
