KEY POINTS
- NNPC closed state-owned refineries after internal reviews revealed chronic losses and value destruction.
- Operational inefficiencies, low crude utilization, and costly contracts drove the shutdown decision.
- New strategy involves equity partnerships with experienced operators to restore sustainable, profitable refinery operations.
The Nigerian National Petroleum Company Limited, NNPC, has shut down its state-owned refineries following an internal review that revealed the facilities were incurring “monumental losses” and destroying value for the nation.
Speaking at the Nigeria International Energy Summit (NIES 2026) in Abuja, Group CEO Bashir Ojulari said the move was necessary to halt years of underperformance despite massive public investment. “After a detailed review, it became clear that we were simply wasting money,” Ojulari said during a Fireside Chat on Securing Nigeria’s Energy Future.
Ojulari highlighted the challenges the refineries faced, including crude oil utilization of only 50–55 per cent while operational and contractor costs soared. The refineries were producing mid-grade products whose market value did not justify the cost of crude inputs. “That trajectory would have meant value destruction for the next 30 years. We were not going to do that,” he noted.
He further described the downstream sector as historically flawed, with excessive focus on financing and engineering contracts rather than long-term operational sustainability. “You cannot have financing, EPC, and O&M contracts all extracting value without any skin in the game. That system was designed for taking, not sustaining,” Ojulari explained.
Collaboration with Dangote Refinery Provides Breathing Space
Ojulari credited the Dangote Refinery with helping stabilize Nigeria’s energy supply. “Whether you love Dangote or hate him, thank God for the Dangote Refinery. It is working, it is in Nigeria, and it gives us room to make better decisions,” he said. NNPC has strengthened collaboration with the private refinery to maximise value delivery while maintaining its role as supplier of last resort.
To revive state refineries, NNPC plans to bring in experienced operators as equity partners who will acquire stakes, lead operations, and rebuild local technical capacity. Ojulari emphasized that the strategy is not about selling Nigeria’s assets but ensuring sustainable, self-financing refineries that operate like businesses. Discussions are already underway with potential investors, including a major Chinese petrochemical firm.
He also reassured that crude-for-naira policies and domestic product supply remain priorities and that pricing would stabilize once supply gaps are addressed.
