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NNPC Halts Crude-Backed Loans to Finance PH, Warri Refineries

The Nigerian National Petroleum Company Limited (NNPCL) has said it is ending the practice of financing the Port Harcourt and Warri refineries with loans backed by crude oil production, opting instead for a performance-driven funding model aimed at making the facilities commercially sustainable.

The NNPC said both refineries must become financially self-sustaining, as the national oil company moves to a new commercial model that requires the plants to raise financing for their operations rather than rely on loans.

The Group Chief Executive Officer of NNPC Ltd, Bayo Ojulari, disclosed this on Tuesday while speaking at the Nigeria Oil and Gas Conference in Abuja.

According to him, the company’s long-term strategy is to ensure the refineries operate as commercially viable businesses capable of attracting financing on their own.

He said future financing for the refineries would be tied to their productivity and operational performance rather than crude oil volumes.

“You heard me talking about our refineries. We’re moving away from situations where the refineries are taking loans based on barrels and not linked to the productivity and performance of the refineries. We are changing that.

“Our solution has to be that those refineries are able to work, raise their own, and deliver, not more contractors coming to take value. That’s the strategy. That’s sustainability. And that’s what will live beyond us,” Ojulari said.

The declaration marks a significant shift in NNPC’s approach to refinery financing, amid ongoing efforts to reposition the state-owned refineries under commercially sustainable business models.

The NNPC boss explained that the company had already begun restructuring its investment portfolio by eliminating projects that lacked clear financing and profitability prospects.

“We recognise that our portfolio has put NNPC into a lot of problems in the past years, where a lot of infrastructure development projects do not have a clear line of sight to finance. They do not have a clear line of sight to profitability. We eliminated all of that from our portfolio last year,” he said.

He added that the company had introduced a new financing model for major infrastructure projects, citing the Ajaokuta-Kaduna-Kano gas pipeline as an example.

“For the first time, we put in a new financing for infrastructure that has never been done in Nigeria, ‘Project Nexus’, where we are able to put financing against the AKK pipeline based on its own throughput, not from another barrel from anywhere. That is the way we are going,” Ojulari stated.

He said the same commercial principles would underpin NNPC’s refinery ambitions, which he noted would rely on integrated partnerships across engineering, logistics, technology and marketing.

“Our refinery ambition depends on integrated partnership. You can see that across engineering, logistics, technology, and marketing. Our energy transition journey requires collaboration with innovators and researchers, development institutions and new technology,” he added.

Ojulari’s latest remarks come weeks after NNPC signed a Memorandum of Understanding with Sanjiang Chemical Company Limited and Xinganchen (Fuzhou) Industrial Park Operation and Management Company Ltd to explore a technical equity partnership for the Port Harcourt and Warri refineries.

The proposed arrangement, which might be modelled after the NLNG ownership structure, could see the Chinese investors acquire about a 51 per cent stake in the facilities as part of efforts to rehabilitate, expand and commercially reposition them.

Under the proposed partnership, the Chinese firms are expected to participate in completing outstanding engineering works, operations and maintenance, capacity expansion, petrochemical integration and gas-based industrial projects around the refinery complexes.

The arrangement is also designed to replace the traditional contractor model with long-term equity participation and joint governance, subject to technical, commercial, financial and legal due diligence before any binding agreement is signed.

During a recent visit to the Warri refinery, Ojulari described the initiative as a strategic move to transform the refineries into profitable and sustainable businesses rather than simply complete rehabilitation projects. He said NNPC was seeking the right technical and financial partners to ensure the facilities operate efficiently and create long-term value.

His remarks reinforced the fact the national oil company intends to move away from financing refinery operations through loans and instead position the Port Harcourt, Warri and Kaduna plants as commercially viable assets capable of attracting investment and generating their own funding.

There are many who are of the belief that the refineries may never work again, but Ojulari is optimistic, assuring Nigerians that the plants will become commercially viable again.