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Can NNPC’s recent deal with Russia’s Lukoil return refineries to life?

More questions are still arising from the last Thursday’s breaking news that Nigeria and Russia in Sochi, Russia, signed a Memorandum of Understanding which will enable both countries’ oil giants, Nigerian National Petroleum Corporation (NNPC) and Russia’s Lukoil to elevate commercial relationship to a government-to-government backed partnership.

Federal Government said with signing of the MoU, NNPC and Lukoil will work together in upstream operations and revamp Nigeria’s refineries.

Group Managing Director of NNPC, Mele Kyari and Vagit Alekperov, President of leading Russian oil company, Lukoil, signed the MoU, which entails cooperation in deep offshore exploration of oil in Nigeria, production, trading and refining.

The signing ceremony took place on the sidelines of the Russia-Africa Summit even as the Minister of State for Petroleum, Timipre Sylva served as a witness.

Ahead of the deal, President Buhari had in a meeting with Russian President Vladimir Lenin, said Nigeria was prepared and willing to work with Russian businesses “to improve the efficiency of our oil and gas sector which provides us with the much-needed capital to invest in our security, infrastructure and economic diversification programmes”.

However, industry analysts are becoming apprehensive on the seriousness of the Federal Government in really making the four moribund refineries to work once again.

It would be recalled that earlier in the second quarter, a delegation of Saudi Arabia oil experts from Aramco was in Abuja and had discussions which NNPC official described as fruitful and targeted at reviving the refineries.

Before the Saudi visitors, NNPC had given hints that it is working with international investors who are willing to drive financier-contractor understanding to revive the same refineries.

As it is now, there are not less than three federal government’s plans for the refineries and the scenario is giving experts restless nights in pinning down the particular partnership plan that will work in the next three years before the end of the current government under President Buhari.

Only weekend, a report on the performance of the four refineries showed that the combined yield efficiency of Nigeria’s refineries has crashed to zero an indication that all four refineries had been running at humongous cost with nothing to show for it.

Nigeria’s refineries are the Warri Refining and Petrochemical Company, Kaduna Refining and Petrochemical Company, and Port Harcourt Refining Company.

The report further revealed that the refineries also performed woefully in terms of the volume of crude oil they processed.

Besides, NNPC opened up in its recently monthly financial and operations report for July 2019 that the three refineries processed no drop of crude oil and produced no product during the month under review.

In the report, NNPC said the combined yield efficiency of all national refineries dropped from the 31.19 per cent in June to zero per cent in July 2019.