Nigeria’s NNPCL signs MoU with Chinese companies to revive refineries with equity partnership model

The Nigerian National Petroleum Company Ltd (NNPCL) has signed a memorandum of understanding with two Chinese firms to advance refinery rehabilitation and introduce a technical equity partnership model aimed at restoring operations and improving long-term efficiency.

Nigeria’s state oil company said in a press release it entered into the agreement with Sanjiang Chemical Company Limited and Xingcheng (Fuzhou) Industrial Park Operation and Management Co. Ltd to accelerate the overhaul and restart of the state-owned Port Harcourt and Warri refineries. The MoU, signed in Jiaxing City on April 30, signals a shift towards partnerships that combine technical expertise with shared financial risk.

Nigeria’s refining system has a combined installed capacity of about 445,000 barrels per day (bpd) across its four state-owned plants, including Port Harcourt (210,000 bpd) and Warri (125,000 bpd). However, utilisation has remained minimal for years despite rehabilitation efforts that have cost several billion dollars, leaving the country heavily dependent on imported refined products.

The move forms part of a broader strategy to address persistent inefficiencies in Nigeria’s refining sector. Despite repeated turnaround maintenance efforts costing billions of dollars, the country’s state refineries have remained largely idle, increasing reliance on imported fuel. By adopting a technical equity structure, the NNPCL aims to align investor returns with operational performance to improve accountability and sustain output.

It comes as Nigeria’s refining landscape is being reshaped by the Dangote Refinery, a 650,000 bpd facility developed by billionaire Aliko Dangote that began ramping up production in 2024.

Under the proposed arrangement with the NNPCL, the Chinese partners are expected to provide engineering capability, operational management and capital, alongside support for expansion projects. These include upgrades to enable the production of cleaner fuels and higher-value petroleum products in line with tightening global environmental standards.

The NNPCL stated that the collaboration would extend beyond rehabilitation to full-scale operation and maintenance, targeting “best-in-class, sustainable performance”. The agreement also outlines plans to develop co-located petrochemical and gas-based industrial hubs around the refinery sites, to create integrated energy centres.

Group CEO Bashir Bayo Ojulari said the MoU followed more than six months of negotiations and technical evaluations, adding that the initiative reflects a move away from contractor-led repairs towards performance-driven partnerships with “skin in the game,” according to local outlet The Punch.

China remains the world’s largest crude importer, with deep exposure to Middle East flows. Around 50% of its crude imports transit the Strait of Hormuz, making it structurally vulnerable to disruptions triggered by the conflict. As for refining, it is largely self-sufficient and often a net exporter of products like diesel and gasoline.