Nigerian National Petroleum Corporation (NNPC) is in talks to hand over the majority stakes in Nigeria's all four refineries, which are all in dire need of an upgrade, NNPC's group managing director Mele Kyari said.
Nigeria has four refineries, two in Port Harcourt, and one each in Warri and Kaduna, but all refineries in Africa's largest oil producer are very old and in need of refurbishment. Over the past five years, utilization rates at those refineries hasn't exceeded 30 percent.
Nigeria is in negotiations to come up with a model of operating those refineries with the state oil firm or the Nigerian government holding minority stakes in the refineries, NNPC's Kyari told local Channels TV.
The executive, however, did not specify who would take over the majority stakes or how the transaction would be carried out.
In April this year, NNPC's Kyari said that Nigeria would shut down all its refineries until it secures financing and ways to upgrade the facilities that were built between the 1960s and 1980s.
Speaking to Channels TV this week, Kyari said that "the inevitable shutdown was necessitated by difficulties in feeding them with crude oil via the pipelines that have been completely compromised by vandals."
Oil theft and militant activity close to oil infrastructure have been perennial problems for Nigeria's oil industry in recent years.
The oil price crash this year hurt the economy. According to the World Bank's latest update on Nigeria from June 2020, the collapse in oil prices coupled with the pandemic is expected to plunge the Nigerian economy into the most severe recession in four decades-the worst since the 1980s.
Nigeria is preparing for an extended period of low oil prices, President Muhammadu Buhari said last month.
Africa's top oil producer, which is also the biggest economy on the continent, needs to develop non-oil sectors to diversify its revenues, Buhari said, as quoted by Nigerian media.
Nigeria's fiscal breakeven oil price - the price of oil at which Nigeria balances its budget - is very high, at US$133 per barrel, given remarkably low non-oil fiscal intakes, Fitch has estimated.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More