NNPC, Daewoo sign $740m maintenance services deal to repair Kaduna refinery

The Nigerian National Petroleum Company (NNPC) Limited says it has signed a maintenance services contract with Daewoo Engineering and Construction Nigeria Limited for a “quick-fix repair” of the Kaduna Refining and Petrochemical Company (KRPC) Limited

Daewoo Nigeria is a subsidiary of Daewoo E and C Co. Limited of South Korea, having a share equity of 90 percent in South Korea and 10 percent in Nigeria.

The national oil company made this known in a tweet on Thursday.

#BREAKING: @nnpclimited's Kaduna Refining & Petrochemical Company Ltd (KRPC) & #Daewoo Engineering & Construction Nigeria Ltd. sign contract for maintenance services for quick-fix repairs of KRPC.#EnergyforToday #EnergyforTomorrow pic.twitter.com/QH2dmkfnUB

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— NNPC Limited (@nnpclimited) February 2, 2023

NNPC said the project will be completed in three work packages as a maintenance services contract by Daewoo Nigeria over a 21-month period at a maximum cost of $740.7 million.

At the contract signing ceremony, Adeyemi Adetunji, downstream executive vice-president, NNPC, said the quick-fix strategy guarantees the fastest route to restreaming the Warri Refining and Petrochemicals Company Limited (WRPC) and KRPC for in-country production of refined petroleum products.

“Restoring WRPC and KRPC back to operation will guarantee energy security for the country, and reduce dependence on imported petroleum products in view of near total dependence on the supply of imported petroleum products and the impact the ongoing Russia-Ukraine war is having on global supply,” he said.

“Also, this will generate revenue, reduce demand for forex, supply raw materials to industries, create employment for Nigerians, and ensure technology transfer, amongst other benefits.”

Adetunji noted that the NNPC is repairing the refineries with a combination of internally generated revenue and third-party financing.

He said after the three refineries (Kaduna, Warri, and Port-Harcourt) are rehabilitated, globally reputable operations and maintenance contractors would be hired to run the refinery safely, reliably, sustainably, and profitably.

“Meanwhile, the rehabilitation of PHRC has progressed considerably. The old refinery is currently at 64 percent completion and the plant is expected back in operation in Q2 2023, while the entire PHRC rehabilitation project now stands at about 59 percent,” Adetunji added.

“On the other hand, WRPC quick-fix project has achieved 28 percent completion and is expected to be restreamed by the end of this year.”

Adetunji also said the board and management of NNPC Limited were fully committed to providing all necessary support to ensure that the refineries are repaired and operational on time and within schedule.

Last year, the NNPC signed a memorandum of understanding (MoU) with Daewoo Group, a South Korean conglomerate, for the rehabilitation of the Kaduna refinery.

In August 2021, the federal executive council (FEC) approved $1.48 billion for the rehabilitation of both Warri and Kaduna refineries.

Desmond Inyamah, acting managing director, Warri Refining and Petrochemical Company (WRPC), had said the refinery will commence full operations in December 2023.

These efforts are geared towards sustaining the progress made at raising oil output.

Last month, Timipre Sylva, minister of state for petroleum resources, expressed hope that Nigeria may stop the importation of petroleum products by the first quarter of 2024.

Sylva said the Port Harcourt refinery, which has a capacity of 60,000 barrels per day (bpd), will be partially restored and ready for operation by the first quarter of 2023.

The minister said in addition to several modular refinery projects in the country, the 650,000 (bpd) Dangote refinery is also expected to be operational by the end of 2023.

According to Sylva, with the combined production capacities of the Port Harcourt refinery, Dangote refinery, and the modular refineries, Nigeria would end the importation of petroleum products soon.