Seven new modular refineries to begin operations in Nigeria next year

Nigeria’s modular refining industry is projected to record significant growth next year, as seven additional refineries are expected to begin operations with a combined capacity of 83,000 barrels per day, according to George Maher-Bonnett of Argus Media.

Maher-Bonnett said the planned expansion would further increase local refining capacity and strengthen the contribution of smaller facilities to the country’s supply of petroleum products.

He disclosed this on in Lagos during a presentation at the OTL Africa Downstream conference, where he examined developments in Nigeria’s petroleum products market amid rising domestic refining capacity and falling fuel demand.

In his presentation, titled African Energy Outlook, Maher-Bonnett disclosed that four modular refineries were operational in Nigeria in September, with a combined capacity of 32,000 barrels per day.

“Four modular refineries operating in September, total 32,000 b/d capacity,” he said.

He further stated that seven new modular refineries were expected to commence operations next year, with a combined capacity of 83,000 barrels per day.

The proposed additions would increase the capacity of Nigeria’s modular refining sector to more than two and a half times the combined capacity of the four facilities operating in September.

However, the presentation did not disclose the identities of the proposed refineries, their owners or locations. It also provided no breakdown of their individual capacities or expected commissioning dates.

Maher-Bonnett also pointed to the increasing contribution of the Dangote Petroleum Refinery to Nigeria’s drive towards self-sufficiency in petroleum products, despite a decline in domestic fuel demand this year.

“Nigerian fuels demand is down this year,” the presentation stated, linking the development to “higher flat prices.”

It also noted that the country’s level of self-sufficiency was improving as the Dangote refinery increased production, while projecting a greater role for modular refineries in the domestic 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.”

The anticipated growth in modular refining capacity comes as Nigeria’s petroleum products market responds to increased local production and shifts in international supply and trading patterns.

According to Maher-Bonnett, the Dangote refinery was operating at a high rate, with its petrol output remaining steady, a development that has reduced the appeal of importing some petroleum products from Europe into West Africa.

“Dangote’s 700,000 bpd Lekki refinery is running hard, gasoline output is steady,” the presentation stated.

The presentation also highlighted developments in Ghana’s refining industry, noting that the 45,000-barrel-per-day Tema refinery was increasing production and improving the country’s domestic supply capacity.

It further observed that the economics of transporting petroleum products from Europe to West Africa, as well as from Europe to the United States, had weakened, with freight costs adding to the challenges facing the trade routes.