Nigeria’s domestic refining sector is expected to expand significantly next year, with seven additional modular refineries projected to commence operations, adding a combined capacity of 83,000 barrels per day.
George Maher-Bonnett of Argus Media disclosed this on Thursday during a presentation at the OTL Africa Downstream conference in Lagos, where he examined developments in Nigeria’s petroleum products market.
In his presentation titled African Energy Outlook, Maher-Bonnett said four modular refineries were operational in Nigeria as of September, with a combined refining capacity of 32,000 barrels per day.
He stated, “Four modular refineries operating in September, total 32,000 b/d capacity,”
He added that seven more facilities were expected to come on stream next year, bringing an additional 83,000 barrels per day of refining capacity to the country.
If the projected expansion materialises, Nigeria’s modular refining capacity would rise to more than two and a half times its September level.
However, the presentation did not identify the seven proposed refineries, their owners or locations. It also did not provide details of their individual capacities or specific dates for the commencement of operations.
Dangote Refinery Boosts Local Supply
Maher-Bonnett also highlighted the growing contribution of the Dangote Petroleum Refinery to Nigeria’s efforts to meet domestic demand for petroleum products, even as fuel consumption has declined this year.
The presentation noted that “Nigerian fuels demand is down this year,” attributing the development to “higher flat prices.”
It further observed that Nigeria’s self-sufficiency in petroleum products was improving as the Dangote refinery increased production, while modular refineries were expected to play a more significant role in the local market.
On government intervention in the petroleum sector during the period under review, the presentation stated: “No government interventions, besides NNPC price cut this month.”
Increased Local Production Changes Import Dynamics
According to Maher-Bonnett, the Dangote refinery was operating at a high rate, with its petrol production remaining steady. This development, he noted, had reduced the attractiveness of importing certain petroleum products from Europe into West Africa.
The presentation stated, “Dangote’s 700,000 bpd Lekki refinery is running hard, gasoline output is steady,”
The report also examined developments in Ghana’s refining sector, noting that the 45,000-barrel-per-day Tema refinery was increasing its output and strengthening the country’s domestic petroleum supply.
It further highlighted the weakening economics of transporting petroleum products from Europe to West Africa and from Europe to the United States, with freight costs adding to the challenges facing traders on those routes.
The expected entry of seven new modular refineries would represent another development in Nigeria’s efforts to expand domestic refining capacity, reduce dependence on imported petroleum products and strengthen local supply.
