The Nigerian Senate approved on a motion to suspend a concession agreement for the Port Harcourt refinery with a subsidiary of Eni on Tuesday because the deal allegedly lacked transparency.
The agreement would have allowed the Italian company’s local unit to repair and operate the 150,000-barrel-per-day facility. Eni had begun negotiations to form a partnership with the Nigerian oil firm Oando for the project, which would have allowed Lagos to reduce its dependency on imported refined oil.
The Senate will now investigate the terms of the contract through a special ad hoc committee.
Eni did not respond to a request for comment by Reuters.
The Nigerian National Petroleum Corporation (NNPC) had been accepting bids for the upgrade of three refineries—Port Harcourt, Warri, and Kaduna—until February 2nd. General Electric had also expressed its interest in being a part of the government’s rehabilitation initiative, which will save Lagos from spending millions of its foreign currency reserves on imports by processing Nigerian crude domestically.
By 2019, Nigeria plans to process in-country all fuel needed for national consumption.
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"We reached an agreement that Agip will build a brand new refinery of 150,000 barrel capacity,” Oil Minister Emmanuel Ibe Kachikwu told reporters following a summit with Eni earlier this month.
Nigeria’s oil industry and economy have been suffering badly, not only from the low oil prices but also from the persisting militant attacks on oil infrastructure that have crippled crude oil production. The sabotages reduced Nigeria’s output from more than 2 million bpd at its highest point in 2015 to 1.4 million bpd last summer, the lowest production level in 30 years. The militant groups have slowed attacks in recent months, allowing output to recover as the federal government negotiates with leaders in the Niger Delta—the center of the civil unrest.
By Zainab Calcuttawala for Oilprice.com
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Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…