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Port Harcourt Refinery Sells First Shipment Of Fuel To Dubai-Based Company

The Port Harcourt refinery has sold its first Low Sulphur Straight Run Fuel oil (LSSR) cargo, pointing to a gradual and phased start-up of operations, a Kpler report indicated on Friday.

Kpler is a data intelligence company that provides market insights, analytics, and technology for the energy and shipping markets. It tracks real-time cargo as well as seaborne imports and exports.

While this will have a limited impact on global Very Low Sulphur Fuel Oil (VLSFO) benchmarks for now, the report stated that it spells trouble for Atlantic Basin exporters of clean products into Nigeria and the wider region.

However, THISDAY reports that low sulphur fuel, commonly used for running boilers and furnaces in various industries, including textile and cement manufacturing, is different from Premium Motor Spirit (PMS) or petrol, which has been the issue of contention since the refinery started operation almost two weeks ago.

But Kpler stated that the Port Harcourt refinery sold its first LSSR cargo, with a sulphur content of 0.26 percent to Dubai-based Gulf Transport & Trading Limited (GTT), to be loaded aboard the Wonder Star MR1 in the coming days.

It added that the 15 kt cargo, sold at a $8.50/t discount to the NWE 0.5 per cent benchmark on a Free on Board (FOB) basis.

“The LSSR was produced from the 60,000 bpd section of the refurbished Port Harcourt refinery following a November 26 announcement that it began processing crude oil.

“LSSR production from this train is expected to steady at about 60kt per month over the near term. The larger 150, 000 bpd section of the refinery, however, remains offline and will start-up after production from the first phase stabilises,” the report noted.

The Port Harcourt refinery which only began production after about seven postponement of scheduled commencement of operations, had met with cynicism from the Nigerian public, especially after it was revealed that the facility was blending petrol instead of carrying out proper refining.

The Nigerian National Petroleum Company Limited (NNPC), had defended itself, saying that blending is not a crime anywhere in the world.

However, the latest report stated that the LSSR export comes amid mounting pressure on NNPC to ramp up production of refined fuels, alongside the Dangote refinery, following numerous delays to the project.

The gradual ramp up of Nigeria’s second refinery, Kpler stated, will alter the petroleum product landscape in Nigeria and West Africa and will help displace imports from traditional suppliers in the region and Europe, as reflected by Nigeria’s falling Clean Product (CP) imports.

While the anticipated LSSR streams from Port Harcourt will have a muted impact on VLSFO benchmarks given the anticipated limited near-term production volumes, it argued that Nigeria’s reduced petrol import dependence will continue to weigh on near-term margins in the Atlantic Basin, adding to VLSFO blend stock availability.

“The pressure will only be compounded as the Dangote and PH refineries ramp up production, and the rehabilitation projects at the Warri and Kaduna refineries near completion”, it added.

Kpler’s estimates have pinned operations at the Port Harcourt refinery at 20, 000 bpd. Looking ahead, it stated that the potential ramp-up to full capacity of 210,000 bpd would weigh on fuel imports to the country, after Dangote’s rising refinery runs already pressured petrol imports to multi-year lows since October.

Before the gradual start-up of the privately-held Dangote refinery in Nigeria one year ago, the country’s downstream sector was dominated by state-owned facilities that were constructed back in the 1960s-1980s.

The 210,000 bpd Port Harcourt, the 125,000 bpd Warri and the 110,000 bpd Kaduna plants boasted a combined capacity of 450,000 bpd until 2016, after which all of them were subsequently shut down due to financing and technical issues resulting in almost zero operational refining capacity left in late 2018.

While the rehabilitation of these state-owned facilities has been a topic of frequent discussion over the past years, only the restoration of the 210,000 bpd Port Harcourt refinery is making visible progress.

NNPC awarded the $1.5 billion contract for rehabilitation to Italian engineering company Tecnimont SPA and the project began in April 2021. Works have seen several delays, with announcements by NNPC already stating last year that operations would start in December 2023.

“Kpler’s in-house crude stocks data corroborates that test runs have been ongoing, with the Petroleum Products Marketing Company (PPMC) inventories dropping from 1.5 million barrels in August to 1.3 million barrels in October to around 1 million barrels in November, with current crude inventories set to enable refinery runs of around 30,000 bpd for one month.

“While CDU 1 has a nameplate capacity of 60,000 bpd, we estimate the unit to only run around 20,000 bpd for the rest of the year, potentially reaching full capacity in Q3, 2025, contributing to total Nigerian crude runs of 420, 000 bpd in September 2025.

“Port Harcourt’s second CDU could start test runs in late 2025, pushing the refinery’s crude intake to 150,000 bpd in December 2026 and total Nigerian throughput to above 700, 000 bpd.

“As a simple refinery with one 60,000 bpd CDU, 6,000 bpd Reformer and without an operational Fluid Catalytic Cracking (FCC) unit, of which we expect the ramp up in late Q3, 2025, we estimate that Port Harcourt’s product output will be mainly gasoline, straight run gasoil and fuel oil.

“This implies that by Q4, 2025, the plant could supply some 24,000 bpd fuel oil, 15,000 bpd gasoline, 15,000 bpd diesel and 6,000 bpd jet, and some minor volumes of Liquefied Petroleum Gas (LPG).

“ If CDU 2 were to fully start up, moving capacity to 210,000 bpd and including all secondary units, which we don’t expect before Q2, 2026, product output could theoretically move to 82, 000 bpd gasoline, 78,000 bpd diesel, 20, 000 bpd jet and 18,000 bpd residue (fuel oil, bitumen, slurry),” the report stated.

Besides, it projected that the Port Harcourt refinery will run almost entirely on Nigerian crude grades as it is owned by the NNPC, stressing that most of the fuel volumes will be consumed by the domestic market and with only fuel oil output contributing to product exports.

“The full ramp-up of the refinery will further improve West African gasoline balances and weigh on fuel imports to Nigeria, a dynamic that is already at play, with October and November seeing gasoline imports to the country drop to the lowest levels in seven years,” the report added.

Emmanuel Addeh