Nigeria’s Moribund Refineries and Ojulari’s New Wild Goose Chase

The signing of agreement between the Nigerian National Petroleum Company Limited and two Chinese companies for the revival, operation and maintenance of the Port Harcourt and Warri refineries has sparked reactions from energy analysts and public affairs commentators, writes Peter Uzoho

The Nigerian National Petroleum Company Limited (NNPC) has signed a fresh Memorandum of Understanding with two Chinese firms, in what it described as an attempt to restart and expand its long-dormant Warri and Port Harcourt refineries, raising both cautious optimism and familiar skepticism about whether this will break a 25-year cycle of failed turnarounds and billions of dollars in sunk costs.

The MoU, signed on April 30, 2026, in Jiaxing City, China, was between NNPC and Sanjiang Chemical Company Limited and Xingcheng (Fuzhou) Industrial Park Operation and Management Co. Ltd. It outlines a potential Technical Equity Partnership (TEP) to complete outstanding rehabilitation work, operate and maintain the two facilities, and expand their petrochemical and gas-based industrial capacity.

Group Chief Executive Officer of NNPC, Bayo Ojulari, described the agreement as “a significant milestone” following more than six months of engagement between technical and management teams. “All parties recognise mutually beneficial opportunities for the development and long-term sustainable profitability of NNPC’s refining assets in Nigeria,” Ojulari said.

But for many industry watchers, the announcement echoes a pattern that has defined Nigeria’s refining sector since the late 1990s: grand plans, large budgets, intermittent fanfare, and little sustainable output.

A History of Billions Spent and Breakdowns

Nigeria’s four state-owned refineries — two in Port Harcourt, and one each in Warri and Kaduna — once had a combined nameplate capacity of 445,000 barrels per day. Today, they operate at near-zero capacity despite decades of rehabilitation efforts.

The Port Harcourt refinery complex, with 210,000bpd capacity, and the 125,000bpd Warri refinery have been the focus of repeated Turn Around Maintenance (TAM) exercises since 2000. The federal government has spent an estimated $18 billion-$25 billion on TAM, equipment upgrades, and consultancy fees over two decades, according to various legislative audits and civil society reports.

The most recent push began in 2021 under the late former President Mohammadu Buhari administration, with a $1.5 billion contract awarded to Tecnimont SpA of Italy for the rehabilitation of Port Harcourt’s 60,000bpd old refinery and 150,000bpd new refinery. The government repeatedly promised mechanical completion and startup dates in 2022, 2023, 2024, and 2025. While NNPC announced mechanical completion of the old Port Harcourt unit in late 2023 and began loading products briefly in 2024, sustained commercial production has not materialised. Warri’s 125,000bpd facility was said to have achieved mechanical completion in early 2025, but has remained idle.

Kaduna’s 110,000bpd refinery is also undergoing rehabilitation under a separate contract, but progress has been opaque.

What the New China MoU Proposes

According to NNPC’s statement, the MoU with Sanjiang and Xingcheng covers three areas: completion of outstanding rehabilitation work at Port Harcourt and Warri; long-term operation and maintenance to achieve “best-in-class, sustainable performance”; and expansion to cleaner, more profitable product standards.

The agreement also contemplates expanding petrochemical capacities and developing co-located gas-based industrial hubs to harness downstream gas opportunities. The structure is a Technical Equity Partnership, meaning the Chinese firms would bring both technical expertise and equity investment, rather than a pure engineering, procurement and construction (EPC) contract.

The MoU is non-binding at this stage. NNPC said it reflects “shared intent to progress discussions in good faith, with any definitive arrangements to follow in due course and subject to customary approvals.”

Ojulari framed it as a step toward identifying “potential technical equity partner(s) to restart and expand NNPC’s refineries,” suggesting the search for a long-term operator is still ongoing.

Industry Analysts’ Reactions

With Dangote Refinery now at full 650,000bpd capacity and exporting surplus diesel and jet fuel to 11 African countries, Nigeria has a domestic benchmark for what efficient refining looks like. The competitive pressure may finally force NNPC to adopt a commercial, rather than political, operating model.

But the announcement has drawn sharp criticism from energy experts and civil society leaders who see it as another chapter in a long book of disappointment.

Former President of the Organised Private Sector and currently of the Alliance for Economic Research and Ethics, Dele Oye, raised serious concerns about the selection of the two Chinese firms.

He said his organisation benchmarked the two Chinese firms against the original contractors handling the refinery rehabilitation projects, namely Technimont and Saipem, both of which he described as globally recognised Engineering, Procurement and Construction (EPC) companies with extensive refinery turnaround experience.

Oye further questioned why NNPC was entering into fresh agreements without first clarifying the status of existing refinery rehabilitation contracts and ongoing investigations by the Economic and Financial Crimes Commission (EFCC).

He recalled that monies had earlier been approved for refinery rehabilitation and argued that Nigerians deserved explanations regarding disbursements, project execution and value received.

“We have not resolved the past. Have we found out, out of the $1.5 billion that was approved for the Port Harcourt refinery, how much was disbursed, what was available, and if indeed we hold them to account? NNPC is silent on that,” he said.

Referencing the Port Harcourt refinery, Oye maintained that despite official claims that operations had resumed, the facility only functioned briefly before shutting down again. “The refinery only worked for 30 days. It was shut down for them to look at what the issues are. It has never been opened,” he recalled.

He warned that failure to properly terminate or resolve previous refinery contracts before entering into new agreements could expose Nigeria to fresh arbitration and litigation risks similar to the Process and Industrial Developments (P&ID) dispute.

Oye insisted that the firms lacked the core engineering competence required for the assignment and advised NNPC against proceeding with the agreements.

“We recommend that NNPC should not go ahead. These two companies have nothing to offer Nigeria. They don’t have the capacity technically. They don’t have the experience,” he maintained.

“The first company, Sanjiang Chemical Company Limited, is not an engineering company. They are more into downstream and chemicals. They have never done any refinery work. It is a public company registered on the Hong Kong Stock Exchange.

“If you look at the company’s fundamentals, it doesn’t have the competence. They are into hydrocarbons. The second company, Xingcheng (Fuzhou) Industrial Park Operation and Management, is just a real estate company. They are into industrial parks. There is no evidence anywhere in the world that they are involved in any refinery or they ran a refinery,” he stressed.

Oil and gas expert, Dan Kunle, said the MoU raises more questions than answers. “We have been down this road too many times. TAM after TAM, contract after contract, and yet our refineries remain monuments to waste. What is different about this Chinese arrangement? Who is bearing the risk? What are the governance structures?”

Kunle argued that without transparent contracting, independent oversight, and a clear exit from political interference, the TEP could become another drain on public resources. “The real problem is not technology. It is governance. It is corruption. It is the lack of a commercial orientation.”

Energy economist and Chief Executive Officer of Dairy Hills, Kelvin Emmanuel, said the timing of the deal suggests desperation rather than strategy. “You have Dangote already meeting domestic PMS demand and exporting surplus. You have a global refining overcapacity looming post-2027. Why is NNPC still pouring money into 1970s-vintage assets instead of focusing on gas and modular refineries?”

Emmanuel also questioned the financial structure. “Technical equity partnership sounds good, but what equity are the Chinese bringing? Is it cash, debt, or just technical services converted to equity? And what happens to the existing $1.5bn Tecnimont contract? Are we layering one contractor on another?”

He added that decentralising refinery operations without addressing pipeline security and crude supply would undermine any partnership. “You can rehabilitate a refinery, but if you cannot secure crude supply or the product pipelines, you will still be importing.”

 Veteran journalist and Arise News anchor, Reuben Abati, was more blunt in a recent broadcast. “This looks like another procurement exercise disguised as reform. Nigerians have been told repeatedly that refineries will come on stream. We have seen ribbon-cuttings that led to nothing. Until we see crude going in and products coming out consistently for 12 months, this is just paper.”

Abati also warned against mortgaging national assets to foreign entities without parliamentary scrutiny. “These are national strategic assets. Any equity deal must go through proper legislative process and public disclosure. Nigerians deserve to know the terms.”

The Governance Gap

The core issue, analysts agree, is governance. NNPC was reformed into a limited liability company under the Petroleum Industry Act (PIA) 2021 to operate commercially and be free from political interference. Yet four years after PIA’s passage, full implementation remains incomplete.

“The PIA has not even been fully implemented,” said NAEE President Dr. Mahmud Hassan.

Without independent boards, cost-reflective pricing, and freedom from fuel subsidy politics, NNPC refineries cannot compete commercially. Even with new partners, they risk being used as political tools for employment or patronage rather than profit centers.

There is also the question of crude supply. Nigeria’s upstream sector has struggled with underinvestment, theft, and pipeline vandalism. The NNPC has introduced the “crude for refinery” initiative to guarantee feedstock, but volumes remain inconsistent. A refinery without crude is an expensive parking lot.

The Dangote Factor and Market Realities

The inauguration of Dangote Refinery has fundamentally changed Nigeria’s refining landscape. At 650,000bpd, it exceeds Nigeria’s total domestic consumption and is already exporting to Ethiopia, Ghana, Togo, and eight other African countries.

This creates both an opportunity and a threat for NNPC. On one hand, a competitive private refinery sets a standard for efficiency, quality, and pricing. On the other, it raises questions about the economic viability of reviving older, smaller, less efficient state refineries.

Chief Executive Officer of Dangote Petroleum Refinery, David Bird,  acknowledged this at a recent energy conference, where he said:  “If Dangote’s scale forces older, smaller, less efficient refineries closing down, then that is a good thing for the planet, because that improves the overall energy efficiency of the refining population.”

His comment cuts to the heart of the debate: should Nigeria keep investing in legacy assets, or focus on supporting new, efficient capacity and a competitive market?

The Gas and Petrochemical Angle

Experts argue that where the China MoU may have merit is in is petrochemical and gas-based industrial component.

Nigeria flares over 300 million standard cubic feet of gas daily due to lack of infrastructure. A co-located gas hub could monetize that gas into fertilizers, methanol, and industrial chemicals — sectors where Nigeria has a trade deficit.

If Sanjiang and Xingcheng bring capital and technical know-how to build these hubs around Warri and Port Harcourt, the economic multiplier effect could justify the investment even if fuel refining margins remain thin.

But again, according to analysts, is execution is key. Nigeria’s industrial parks have a poor track record due to power shortages, regulatory delays, and infrastructure deficits.

What Must Change for Success

For this partnership to succeed where others failed, industry experts suggest several conditions must be met, which will include transparency –ensuring that the final TEP agreement must be published, including equity structure, funding sources, profit-sharing, and performance benchmarks, and that parliamentary oversight is essential.

They said refineries must operate as independent profit centers, free from political directives on pricing, staffing, or crude allocation.

  They also opined that NNPC must guarantee a reliable crude supply through secured pipelines or alternative logistics, adding that this may require joint security arrangements with host communities and private operators.

According to analysts, cost-reflective pricing is non-negotiable, arguing that subsidized fuel creates arbitrage, smuggling, and revenue leakage that kill refinery economics.

Furthermore, rather than a big-bang restart, a phased approach starting with the most viable units could reduce risk and demonstrate early wins. Stakeholders equally advised that the partnership must include clear local content provisions to build Nigerian technical capacity, not just import Chinese labor.

The refineries don’t need another ribbon-cutting this time. Rather, they need crude, cash flow, and competent management, to make t work again and deliver r value to the nation.