Nigeria’s long-troubled refining sector has returned to the spotlight after the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) disclosed that the old Port Harcourt refinery is now technically ready for operation and could resume production within one week—if commercial conditions allow.
The revelation has reignited public debate over the future of Nigeria’s state-owned refineries, the cost of prolonged rehabilitation efforts, and the Nigerian National Petroleum Company Limited’s (NNPCL) balancing act between national energy security and commercial viability.
Speaking during a television interview on Tuesday, Festus Osifo, president of PENGASSAN, said rehabilitation work on the facility had reached about 90 percent completion, making it operationally fit to refine crude oil at short notice.
Refinery technically ready, but decision hinges on economics
Osifo explained that the refinery’s continued shutdown is not due to mechanical failure or incomplete infrastructure but rather to concerns about refining margins in the current market environment.
“As of today, you can start the old Port Harcourt refinery and it will function,” he said. “Within one week, it can be brought back to life if that decision is taken.”
However, he stressed that NNPCL, now operating as a commercial entity, must consider profitability before restarting operations.
According to him, the economics of refining imported or locally sourced crude remain challenging due to high feedstock costs, foreign exchange exposure, and fluctuating product prices.
Industry analysts say this dilemma highlights the broader struggle facing Nigeria’s refining sector—how to reconcile public expectations of energy self-sufficiency with market-driven operational realities.
Port Harcourt refinery restart raises questions over cost, value, and strategy
The prospect of a Port Harcourt refinery restart has drawn mixed reactions from stakeholders. While labour unions and energy security advocates argue that restarting the plant would reduce fuel imports and conserve foreign exchange, others warn that operating at a loss could deepen financial pressures on NNPCL.
Osifo illustrated the challenge by pointing out that crude oil input costs could exceed the market value of refined products.
“If you feed crude oil worth about five million dollars into the old Port Harcourt refinery, what you are likely to realise from selling the refined products may be around $4.5 million,” he said.
This margin gap, he noted, is a key factor shaping NNPCL’s cautious approach.
Rehabilitation investment not wasted — PENGASSAN
Despite concerns about immediate profitability, PENGASSAN insists that funds spent on rehabilitating the refinery were not squandered. Osifo said extensive upgrades were carried out on critical components, significantly improving the plant’s asset value.
He listed replaced compressors, upgraded control rooms, and modernised panels among the improvements completed during the rehabilitation phase.
“The contractors did not remove these assets. They are all still there,” he said. “If you value the refinery today, it is far more valuable than what it was before rehabilitation.”
Energy experts agree that while the refinery may not yet be optimally positioned for profit, the upgrades have enhanced its long-term potential, especially if refining economics improve or supporting policies are adjusted.
A history of restarts and shutdowns
The Port Harcourt Refining Company, one of Nigeria’s oldest refining assets, has experienced multiple shutdowns over the years due to underinvestment, vandalism, and operational inefficiencies.
After years of inactivity, the refinery was officially reopened in November 2024 following rehabilitation efforts backed by significant public funding. However, operations were suspended again in May 2025, barely six months later, due to technical and commercial challenges.
Since then, the facility has remained idle, fuelling criticism from citizens and lawmakers who question the sustainability of Nigeria’s refinery rehabilitation model.
Broader implications for Nigeria’s energy policy
The debate surrounding the Port Harcourt refinery restart goes beyond a single facility. It reflects wider structural issues in Nigeria’s downstream petroleum sector, including pricing controls, foreign exchange volatility, and infrastructure gaps.
With the gradual removal of fuel subsidies and increased reliance on market pricing, state-owned refineries face stiff competition from privately owned facilities such as the Dangote refinery.
Analysts say NNPCL must clearly define the strategic role of its refineries—whether as commercial profit centres or stabilising tools for domestic supply.
“If the objective is purely commercial, then margins matter,” said an energy economist in Lagos.
“But if the objective includes energy security and supply stability, then government may need to accept lower margins in the short term.”
Labour union’s position and warning signals
While PENGASSAN has acknowledged the economic concerns, the union has consistently urged NNPCL to prioritise domestic refining capacity. Osifo maintained that running the refinery—even at modest margins—could generate employment, build technical capacity, and reduce dependence on imports.
The union has also been vocal on broader industry issues, including opposition to certain asset sales and concerns over workforce welfare, signalling that labour relations could become strained if refinery decisions are perceived as politically or commercially driven at the expense of national interest.
Whether the Port Harcourt refinery restart happens in the coming days will depend largely on NNPCL’s internal commercial assessment and broader market conditions. Rising global oil prices, exchange rate stability, or supportive policy adjustments could tilt the balance in favour of resuming operations.
For now, the refinery remains in a state of readiness—technically capable but commercially constrained.
As Nigeria continues to navigate energy sector reforms, the fate of the Port Harcourt refinery may serve as a test case for how the country manages legacy assets in a more market-oriented petroleum industry.
