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Exploration for crude  petroleum oil in Nigeria first began in 1908. However, serious and sustained efforts did not happen until Shell Darcy Petroleum Company commenced operations in 1935. It took this company more than 20 years to discover petroleum crude oil in commercial quantities in Oloibiri in 1956.  Before 1965, all the international petroleum marketing companies in Nigeria imported their stocks independently from their own refineries located abroad. As the local demand grew for these products, and following the local availability of crude oil by pipeline, establishment of a refinery in Nigeria became commercially viable.  Two oil marketing companies in Nigeria , Shell and British Petroleum, BP, formed a 50/50 joint venture refining company in Nigeria , the Nigerian Petroleum Refining (NPRC) in 1960.  
The NPRC built a 38,000b/d petroleum refinery at Alesa-Eleme, near Port Harcourt to refine local crude oil into five petroleum fuel products. Construction of the refinery commenced in 1963 and production started two years later, in 1965. 
Crude oil processed in the NPRC refinery was a portion of the production destined for export through Shell-BP’s Bonny Island export terminal. By a special contract agreement among all the five major products marketing companies, they procured crude oil from Shell-BP.  The crude oil was transported by pipeline to the NPRC Refinery for processing based on the quantity processed, at an agreed unit price per ton of crude oil.  The major marketers also, at their own cost, arranged the timely evacuation of the products from the refinery, mostly by the sea to Lagos and the remaining by road tankers.  The refinery was de-bottlenecked in 1973, in order to increase its crude oil processing capacity from 38,000b/d to 60,000b/d. The domestic demand for petroleum products which steadily increased was satisfied by the NPRC refinery for about 8 to 10 years. 
In 1970, the Federal Government acting as a member of OPEC compulsorily acquired and paid for an equity share of 60 percent in all private international companies working in the Upstream and Downstream sectors of the Petroleum Industry in the country. 
The Federal Government invested these shares in its wholly owned corporation, the Nigerian National Oil Corporation, NNOC. 
NPRC was one of such companies whose shares were compulsorily acquired by government. NPRC was allowed to continue to operate commercially and profitably, without any interference from government. The Federal Government participated only at the board, represented by NNOC, as the majority shareholder. NPRC paid dividends regularly to its shareholders. The refinery was adequately maintained and achieved its production targets efficiently and safely. 
 NNPC Refinery Division 
In 1977, a new Decree 77 was promulgated to establish the Nigerian National Petroleum Corporation, NNPC. Among the five divisions created in the new NNPC corporate headquarters was the Refinery Division, which was headed by a general manager. This division was responsible for policy, projects implementation and coordination of all petroleum refining activities of the corporation.  In particular, the general manager Refinery Division was appointed chairman, NPRC Board, following the federal government’s compulsory acquisition of the (60%) equity shareholding in the NPRC. 
 NNPC Refinery Port Harcourt 
In 1978, the Federal Government through the NNPC had acquired the remaining 40 percent equity of NPRC from Shell and BP. The name of the NPRC was changed to NNPC Refinery, Alesa-Eleme, near Port Harcourt . A new position of managing director and a new management structure were established. The chairman of the board remained the general manager Refineries Division of NNPC. While the refinery continued to produce and maintain its facilities as before. 
With a few years, the NPRC management’s commercial culture had been replaced with a more bureaucratic style on the NNPC management.  In fact several management changes occurred within the first five years which fully entrenched the bureaucratic style and structure. The NNPC Refinery at Port Harcourt had become a cost centre instead of a profit centre. The same fate would soon befall the other refineries subsequently constructed by the NNPC. 
 The Refinery project at Warri, Kaduna & Port Harcourt 
The acute and prolonged nationwide shortage of refinery products, especially petrol, started between 1973 and 1974. These shortages resulted from several factors but were generally due to the sudden sharp increases in demand. The main reasons for the high demand were attributed to a considerable increase in the economic activities following the end of the Nigerian Civil war.  
This also coincided with the beginning of the so called ‘Oil boom’ in Nigeria which started in the mid 1970’s. Nigeria suddenly began to earn unprecedented amounts of revenue from oil.  International Oil prices had risen sharply following the oil embargo of 1973 by the Arab countries as a result of the invasion of Egypt by Israel . These earnings were mainly from Royalties and the Petroleum Profit from Tax (PPT) paid by the Oil companies. 
The Federal Government financially buoyed by these large earnings from oil had embarked on a very large number of projects including a Iron & Steel Industry, road and bride construction projects, and two grassroots refinery projects. However, probably the singe most contributory factor to the sharp increases in demand for petrol was the Udoji Awards for salary increases and arrears in the public and private sectors. 
These awards gave a huge step increase in the purchasing power of a large number of Nigerians.   This temporarily created a middle class in the counry. Purchase of all types of vehicles, especially ‘tokunbo’ cars, electrical and electronic household goods sky-rocketed. The domestic demand for petrol more than doubled. Electrical power consumption also sharply increased nationwide. 
Feasibility studies were first undertaken by BEICIP, an international oil and gas consulting firm from Paris , in 1974 for the Federal Government. The objectives were to establish the demand and consumption patterns of petroleum products. These studies were also used to determine the size of a new refinery to be constructed. Following a tendering exercise involving international engineering contractors, a contract was awarded to Snamprogetti Spa of Milan , Italy , in 1975. The contract was for the design, procurement and construction of a new grassroots petroleum refinery in Warri. The design capacity of the refinery was 100,000 b/d, and the lump sum cost was $478 million, for project duration of 30 months. 
This project was completed in 1978. The refinery commenced operation immediately thereafter.
A second new refinery was planned for the production of lubricating oil products, waxes and asphalt (for the road projects). This refinery which was located in Kaduna consisted of two refining streams, (50,000 b/d fuels units) and (50,000 b/d lubes, waxes Asphalt plants). The contract for the construction of the Kaduna Refinery was awarded in 1976 to Chiyoda Engineering and Construction Company of Japan, at the cost $525 million, for a project completion period of 36 months. The refinery was completed on schedule and was commissioned in later 1979. The existing products pipeline linking Warri Refinery to Kaduna was converted to pump crude oils for supply to the new Kaduna Refinery. 
By 1980, with the old Port Harcourt , Warri and Kaduna refineries in operation, there was still an appreciable level of importation of petroleum products to augment domestic production from the three refineries. A review of the old study was conducted to update the demand and the pattern of consumption to cover the next period of 10 years. 
This was also to determine the optimum size and location for an export oriented refinery, which would also supply the domestic market as required. The several options considered included, new refineries and/or expansion of existing plants. The Federal Government decided to expand the capacities of the fuels units in the existing refineries at Warri and Kaduna by “de-bottlenecking.” 
The de-bottlenecking route was quicker by capacity increases were moderate. The de-bottlenecking projects were completed in 1985. The new capacities at Warri Refinery and Kaduna Refinery became 125,000b/d and 110,000b/d respectively. In addition, a new grassroots refinery with a capacity of 150,000 b/d would be constructed adjacent to the existing refinery at Port Harcourt . The total additional refining capacity added from the result of the new study became 185, 000 b/d. this would bring the total refining capacity in Nigeria on completion of the projects in 1989 to 445,000b/d, which is still the current total installed refining capacity in Nigeria.
The new Port Harcourt refinery with a capacity of 150,000b/d was designed to include facilities to export products in excess of domestic demand. The contract for the design and construction was awarded to a consortium of JGC Corporation/Marubeni Corporation both of Japan and Spibatignolles of France in October 1985 at a total cost equivalent of US$850 million. The construction was completed and the refinery was successfully commissioned in October 1989. 
However, the exportation of petrol and diesel from refinery lasted only a few shipments during 1990 and 1991. The increase in domestic and demand couple with decreasing production from Warri and Kaduna refineries had put an end to the idea of exportation of petroleum products, except fuel oil. 
 The decision by the Federal Government to construct new refinery
It is important to make the following comments on the policy decision by the Federal Government to undertake these refinery projects from 1974 to 1989. 
I believe the Federal Government took the correct decisions at that time, to undertake the projects because: 
 (a) The investment and operating costs of any refinery project were too high for any local private company to undertake, regardless of the profitability of the enterprise. Moreover, non of the international oil companies operating in Nigeria was interested in establishing any new refineries in Nigeria at that time. 
(b) The economic stability of the country was seriously threatened by the acute shortage of the crucial fuel products. 
(c) There are many other additional benefits realisable from that decision, such as the creation of new jobs and potential cost savings for the country’s economy. The feasibility studies for the new Port Harcourt refinery project had clearly demonstrated the potential savings to be earned from refining Nigerian crude oils at refineries located on the coastal areas of the country, when compared to the importation of the products for domestic consumption. 
(d) Fortunately, the federal government to preserve the economic and social stability of the country, by investing in these projects in response to the looming crisis. It is a completely different matter to continue to own, manage and operate such strictly commercial assets as cost centre. With the benefit of hind sight, the federal government should have divested all or majority of its equity to a competent private company at the earliest opportunity. That would have ensure the refineries would be run efficiently and profitably at all times like the NPRC refinery had been a decade earlier. Unfortunately it did not do so. I am not aware such advice was given to the federal government at that time. 
 Analysis of the performance of the Nigerian refineries 
There are standard criteria used in the industry for measuring the performance of petroleum refineries. These include: 
a)      The percentage capacity utilisation. This is the most common parameter used and it essentially measures the overall efficiency of the refinery. 
b)      The products yield vis-à-vis design yields. This measures the efficiency of the processing unit of the refinery. 
c)      Historical safety records. Such records include the number, frequency and severity of different causes of accidents. 
d)      The refinery on-stream factor. This is measured for individual process units, as well as the entire refinery. These factors measure the continuity and reliability of the operations. 
e)      The design turn down ratio of 60% is the minimum percentage of design capacity throughput recommended to operate the crude oil distillation column by process engineering designers, industry wide. If the crude distillation column is operated below this value the products yield pattern and quality may be different from the design specifications. 
f)        On the basis of the parameters described above I have reviewed the performance of the Nigerian Refineries from inception up till the recent times. 
 Culled from a lecture delivered by Alex Ogedengbe, a former managing director of Port Harcourt Refinery, at the recent induction ceremony of Nigerian Academy of Engineers, in University of Lagos .