Inside Oando’s Risky Bet on 108-Year-Old Loss-Making Caribbean Refinery

In February, the Wale Tinubu-led Oando’s decades-long ambition to have a refinery in its portfolio became a reality overseas — about 8,615 kilometres away from home.

In Nigeria, the indigenous energy group’s attempts to own or build a refinery have proved abortive. In December 2004, its CEO, Tinubu, announced their intention to build “a world-class refinery when we must have secured the necessary funds”.

Between 2005 and 2007, Oando was among the companies in the race to acquire a 51 percent stake in the government-owned Port Harcourt refinery but its bid was not successful.

The company said in April 2009 that it had completed “a comprehensive four-month bankable feasibility study” conducted by Wood Mackenzie and Foster Wheeler for “an ultra-modern 240,000 barrels per day (bpd) greenfield refinery” in Lekki Free Trade Zone, Lagos. “This is the first phase in the development of a 360,000bpd capacity refinery project,” it said, adding that it was on the verge of commissioning a front-end engineering design for a finished products reception terminal in the same location in preparation for developing the refinery.

That was more than four years before Aliko Dangote, Africa’s richest man, announced its decision to build a refinery. While Dangote’s 650,000bpd plant, located in Ibeju-Lekki, started operations last year, it remains to be seen why the Oando project stalled.

Fast-forward to February 2025, its subsidiary, Oando Trading, emerged as the preferred bidder for the lease of Trinidad and Tobago’s Guaracara refinery, which has been sitting idle since 2018.

“The next steps in the process involve detailed discussions with the government and regulatory authorities to finalize the lease agreement and operational framework,” the company said in a statement on March 11.

The refinery, built in 1917 and located in Pointe-à-Pierre, has a capacity of 175,000bpd and is well-suited for processing regional crude oils and supplying both domestic and regional markets with refined products, according to Oando.

Previously owned by Texaco, oil refining started with a production of 1,200bpd. By the 1980s, production jumped to 355,000bpd, much of it being fuel oil, which was in great demand in those days.

By 1984, the refining business was in trouble and losing money, facing closure by the international oil giant. The government, led by Prime Minister George Chambers, purchased the refinery for $189.2 million on August 30, 1984.

After operating the plant for more than three decades, the government decided in 2018 to close it following years of losses and amid the decline in domestic oil production.

In his speech on September 3, 2018, Prime Minister Keith Rowley noted that while the country had a refining capacity of 140,000bpd, the local production available for refining was 40,000bpd and the country was relying mostly on a daily importation of 100,000bpd that was refined “at a significant and constant loss”.

The state-owned oil company, then known as Petrotrin, posted a loss of $1.04 billion in its refining and marketing business for the nine months ended June 30, 2017.

The refinery was shut down on August 28, 2018, with 1,700 workers losing their jobs. Petrotrin was dissolved on December 1, 2018, and the refinery was transferred to a new company named Guaracara Refining Company Limited. 

“Our Point-a-Pierre refinery is a hundred and one years old and has reached the end of its commercially viable days. It is now at a stage where it is haemorrhaging cash and the cost of rehabilitating it is way more than its potential to ever be profitable, competitive or sustainable,” Rowley said at the time.

He said the refining assets of Petrotrin could be put in a separate company for opportunity attention, adding that Oilfield Workers’ Trade Union (OWTU) would be given the first option to own and operate it on the most favourable terms.

Patriotic Energies and Technologies Co, a subsidiary of OWTU, made a $700 million offer, outbidding US private equity firm Beowulf Energy and German refiner and trader Klesch, was selected as the preferred bidder. But the sale agreement with the company collapsed in late 2020 as the government rejected its final proposal.

In July 2021, Oil & Gas Journal reported that state-owned Trinidad Petroleum Holdings Limited (TPHL) restarted its search for partners to purchase and revive the refinery.

Energy minister Stuart Young said in May 2022 that the country was in talks with US-based Quanten LLC for the sale of the refinery, adding that the company was engaged with TPHL and had to go through the standard and required processes.

Guyana, the country’s neighbour, rejected a proposal from the government in February last year that it should supply crude to allow the Guaracara plant to be reopened.

In June last year, Argus Media reported that Trinidad and Tobago was again seeking an operator for the mothballed Guaracara refinery.

Minister Young said that month that the company that would take over the plant “would have to be able to address several issues including asset management and the financial capability to operate the refinery.”

With the Caribbean nation still grappling with lower oil production, a major challenge awaiting the new operator of the refinery is feedstock supply.

Oando, listed in Nigeria and Johannesburg, has seen its oil production rise following its $783m purchase of Nigerian Agip Oil Company (NAOC) which was completed last August. In January, the company secured operatorship of Block KON 13 in Angola’s Onshore Kwanza Basin, where previous exploration had already identified oil and gas deposits.

Although the company has seen its financial performance improve in the past year, its debt remains high at N2.7 trillion as of December while its total liabilities exceeded its assets by N273.03 billion. Its NAOC acquisition was financed through a $650m loan.

With the 108-year-old Guaracara refinery bleeding money and said to require huge investment including infrastructure upgrades before it was shut down in 2018, Oando will have its work cut out to turn around its fortunes.