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After Wasting $25B on Refinery Repairs, Nigeria Turns to Chinese Firms for Help

Nigeria’s national oil company has signed a new agreement with two Chinese firms to revive its long-dormant state refineries. This marks the latest chapter in a 25-year cycle of costly rehabilitation failures that have consumed an estimated $25 billion in public funds without delivering sustained domestic fuel production.

The Nigerian National Petroleum Company Limited (NNPC) signed a Memorandum of Understanding (MoU) with Sanjiang Chemical Company Limited and Xinganchen (Fuzhou) Industrial Park Operation and Management Co. Ltd on April 30, 2026, in Jiaxing City, China. NNPC Group Chief Executive Officer, Bashir Bayo Ojulari, signed the agreement alongside Sanjiang Chairman Guan Jianzhong and Xinganchen Chairman Bill Bi.

The deal targets the Port Harcourt refinery, with a capacity of 210,000 barrels per day, and the Warri refinery, rated at 125,000 barrels per day. Together, these two refineries represent a combined capacity of 335,000 barrels per day. For most of the past two decades, that capacity has remained idle while Nigeria spent billions on imports, draining foreign exchange reserves.

What the Deal Actually Proposes

NNPC describes the agreement as a Technical Equity Partnership (TEP). This model differs from previous rehabilitation contracts in a significant way. In earlier Turnaround Maintenance programs, contractors performed work and left. Under the proposed TEP model, the Chinese partners would complete any remaining rehabilitation, handle day-to-day operations and maintenance, and drive expansion plans, including producing cleaner fuels and higher-value petroleum products.

NNPC also envisions creating co-located gas-based industrial hubs around both refinery sites. These hubs could convert Nigeria’s flared gas into fertilizers, methanol, and industrial chemicals—sectors where the country consistently runs a trade deficit. Nigeria flares over 300 million standard cubic feet of gas daily due to inadequate infrastructure.

Ojulari called the signing a significant milestone after more than six months of technical and commercial engagement with the Chinese firms. He framed the arrangement as a shift from contractor-led rehabilitation to a performance-driven partnership model in which both parties share risks and rewards.

It is important to note that the MoU remains non-binding. Any definitive commercial arrangements will require further negotiations, regulatory approvals, and detailed project execution plans.

A History That Demands Scrutiny

The skepticism surrounding this agreement stems from 25 years of disappointing outcomes.

From 2010 to 2023, Nigeria spent over N11 trillion (approximately $25 billion) on refinery rehabilitation, maintenance, and turnaround programs for the Port Harcourt, Warri, and Kaduna refineries. Across various administrations, the spending was as follows:

Under Olusegun Obasanjo (1999-2007), over $800 million was spent, with repeated claims of restored operations that never materialized.
Under Umaru Musa Yar’Adua and Goodluck Jonathan (2007-2015), spending rose to over $1.6 billion, including a disputed 2012 claim of 60% capacity utilization.
Under Muhammadu Buhari (2015-2023), over $2.9 billion was committed, including $1.5 billion for Port Harcourt and $1.48 billion combined for Warri and Kaduna.

The Buhari-era effort saw some promises, but they were largely unmet. NNPC announced mechanical completion for the Port Harcourt refinery in late 2023 and briefly loaded products in 2024. However, by May 2025, the facility shut down again due to performance issues. The Warri refinery also declared mechanical completion in early 2025 but went silent thereafter. The Kaduna refinery continues rehabilitation under a separate contract, with no transparent progress updates.

Adewale-Smatt Oyerinde, Director-General of the Nigeria Employers’ Consultative Association (NECA), expressed frustration, stating that Nigeria spent $25 billion without seeing any returns and could not afford another wasteful project. He criticized the MoU as another opaque deal, with unresolved questions about past spending.

Who Are the Chinese Partners?

Industry analysts have raised concerns about the credentials of both Chinese firms.

Sanjiang Chemical Company Limited, founded in 2003 and headquartered in the Zhapu Economic Development Zone in Zhejiang Province, is a listed petrochemical company. Its focus is on ethylene oxide, ethylene glycol, polypropylene, and surfactants. The company operates large integrated chemical processing units but does not have experience in crude oil refining or refinery rehabilitation.
Xinganchen (Fuzhou) Industrial Park Operation and Management Co. Ltd focuses on industrial park management, investment facilitation, and infrastructure development. Like Sanjiang, Xinganchen has no publicly verifiable track record in large-scale refinery operations.

Critics compare these firms with previous contractors like Saipem and Technimont, both globally recognized engineering firms with refinery rehabilitation expertise. There are also concerns about whether the Chinese partners have access to the original process licenses for the Port Harcourt and Warri refineries, and whether NNPC ensured performance guarantees before signing.

A senior NNPC official, speaking anonymously, clarified that no financial commitments have been made, and no government funds are involved at this stage. The MoU simply lays out a preliminary framework for exploring collaboration in financing, operations, maintenance support, petrochemical development, and gas-based industrial projects.

Stakeholders Divided on What Comes Next

Business groups, civil society, and energy professionals have differing opinions on the deal.

NECA calls for full privatization or concession of both refineries. The association argues that governance reforms must precede any further rehabilitation. Oyerinde stated that NECA would only support refinery revamp efforts that are transparent, accountable, and commercially sustainable.

Senior lawyer Olisa Agbakoba described the refineries as “dead” and questioned the opacity of past spending. He asked directly what value Nigerians received from the $1.7 billion spent on the Port Harcourt refinery alone.

The Nigeria Civil Works Government Group took a more positive view. Chairman Collins Eshiofeh described the agreement as a strategic masterstroke and argued that proper implementation would strengthen energy security, conserve foreign exchange, and create jobs.

Residents of Alesa Eleme, a host community near the Port Harcourt refinery, expressed cautious optimism. They view potential new investment as an opportunity for employment, infrastructure, and economic growth that has long been promised but never materialized.

Dangote’s Shadow Over the State Refineries

Any discussion of Nigeria’s refinery sector now occurs in the shadow of the Dangote Petroleum Refinery, a 650,000-barrel-per-day facility on the outskirts of Lagos that has transformed the country’s refined product landscape.

The Dangote Refinery now produces more petrol than Nigeria’s daily consumption, exceeding 57 million liters of petrol daily. The facility has reduced daily petroleum imports from over 42 million liters in December 2025 to just 3 million liters by February 2026. It has also started exporting petroleum products to other African countries.

This stark contrast shows that private sector investment has achieved what decades of state-led efforts could not. Dangote Refinery CEO David Bird acknowledged this dynamic at a recent energy conference, noting that if the plant’s scale forces older, less efficient refineries to close, it would benefit overall energy efficiency in the refining industry.

However, the Dangote facility faces a constraint: insufficient local crude supply. NNPC and international oil companies often prefer to export crude instead of supplying it to the Dangote refinery, which is dependent on imports for roughly 70% of its feedstock needs.

What Determines Whether This Deal Breaks the Pattern

Analysts and governance experts agree that the TEP structure has theoretical merit. Tying partner returns to operational performance aligns incentives in a way that fixed-fee contracts never did. The inclusion of a petrochemical and gas hub component also adds genuine economic value beyond simple refinery restoration.

However, the same experts caution that structure alone cannot fix the accountability gaps. NNPC has not addressed questions about previous spending or provided updates on the current condition of the refineries. The Economic and Financial Crimes Commission is still investigating previous refinery contracts.

As THISDAY notes, the MoU’s true potential may lie in its petrochemical and gas-based industrial elements. If Sanjiang and Xinganchen bring capital and technical expertise to build gas hubs around Warri and Port Harcourt, the economic impact could justify the partnership, even if crude refining remains a challenge.

FAQs

What did NNPC sign with the Chinese companies?
NNPC signed a non-binding Memorandum of Understanding with Sanjiang Chemical Company Limited and Xinganchen on April 30, 2026. The MoU establishes a preliminary framework for a potential Technical Equity Partnership to rehabilitate and operate the Port Harcourt and Warri refineries.

How much has Nigeria spent on refinery rehabilitation historically?
Between 2010 and 2023, Nigeria spent over $25 billion on refinery rehabilitation, maintenance, and turnaround programs. This includes $2.39 billion spent on the Port Harcourt and Warri refineries between 2021 and 2026.

Why do critics question the credentials of Sanjiang and Xinganchen?
Critics question these companies’ credentials because neither has a track record in large-scale refinery rehabilitation or operations. Sanjiang is a petrochemical manufacturer, and Xinganchen specializes in industrial park management, not crude oil refining.

What is a Technical Equity Partnership in this deal?
The TEP structure ties the partners’ returns to the refineries’ actual performance. Sanjiang and Xinganchen would rehabilitate, operate, and maintain the facilities, with profits shared based on performance, rather than receiving fixed fees.

How does Dangote Refinery affect Nigeria’s need for state refineries?
Dangote Refinery now produces more petrol than Nigeria consumes daily and has started exporting to other African countries. The private refinery has achieved what state-run refineries have failed to do, highlighting the potential of private sector involvement in the sector.