It has been said that Nigeria is the only country that buys what it already has in abundance. With an average of 2.5 million barrels per day (bpd), Nigeria is the largest producer of crude oil in Africa. It is, therefore, an anomaly that the country relies on importation of petroleum products to meet the demands of its populace.
According to the Nigerian National Petroleum Corporation (NNPC), the Nigerian government currently has four refineries; two in Port Harcourt, and one each in Kaduna and Warri. The refineries have a combined installed capacity of 445,000 bpd. Official figures from the NNPC in 2018 indicates that none of the refineries was operating at up to 50 per cent capacity.
In May 2018, while speaking at the Offshore Technology Conference (OTC) in Houston, Texas, US, the Group Managing Director of the NNPC, Dr. Maikanti Baru said that the nation will achieve at least 90 per cent refining capacity by the end of 2019.
Nevertheless, even at full operating capacity, the government-owned refineries cannot convert Nigeria’s huge amount of crude oil into refined petroleum products. It is therefore, imperative that more refineries come on board to stimulate the country’s transformation from crude oil producer to exporter of petroleum product.
Both the government and private organizations are making efforts to bring new refineries on stream and these initiatives are beginning to take shape.
The upcoming refineries in Nigeria are divided into two types; Conventional Refineries and Modular Refineries
a. Conventional Refineries (Minimum of 50,000 bpd)
Within the past 8 years, The DPR has issued over 45 licences for private refineries. However, most of them have been revoked because the projects failed to take off after an 18-month deadline, due to political interferences, a lack of finance and technical know-how and inability to get the assurance of crude oil supply from the Federal Government. Below are the most feasible ones at the moment:
- Dangote Refinery, Ibeju-Lekki
The 650,000-bpd refinery, being built by Africa’s richest man, Aliko Dangote, is also expected to be the continent’s largest when it comes on stream in 2020.
Located at the Lekki Free Zone near Lagos, it is expected to create over 4,000 direct jobs and help Nigeria save over $7.5 billion through import substitution. This is because it will help the Federal Government reduce petroleum products imports, which remain a major drawback in our economic development.
2. Petrolex Refinery, Ibefun
The second largest refinery coming on stream is the 250,000-bpd privately-owned Petrolex Refinery being built at Ibefun, Ogun State. Petrolex is owned by Segun Adebutu, son of popular lotto king; Adebutu Kesington, known as Baba Ijebu.
According to the DPR, this refinery is a conventional plant capable of producing transportation fuels PMS, HHK, AGO; heating oils’ LPFO, and petrochemicals. DPR issued a Licence to Establish in December 2017 and the project is expected to be completed by 2021.
The Petrolex refinery is being built on the company’s mega oil city, which is also home to the largest tank farm in Sub-Saharan Africa
3. Resource Petroleum & Petrochemicals International Incorporated
Located in Ikot Abasi, Akwa Ibom State, this conventional refinery with the capacity to process 100,000bpd, got its Approval to Construct (ATC) revalidated in 2017.
The firm secured bank guarantee letter for $5.5billion in January 2017. According to the DPR, construction of the refinery was to commence August, 2017. However, there are no activities at the moment
4.Katsina Refinery, Mashi
The proposed refinery, to be located in Mashi, Katsina State is a partnership between Nigeria and the government of Niger. The 150,000-barrel capacity refinery is expected to cost over $2 billion and will be completed in 2021.
According to media reports, the project is facilitated by Niger Republic, Nigeria’s neighbour to the north. The refinery is billed for completion in 2021.
The Nigerian Minister of State for Petroleum Resources, Ibe Kachikwu announced the proposed project in July 2018 while signing a Memorandum of Understanding (MoU) on behalf of the Nigerian government with the Nigerien Minister of Energy, Foumakaye Gado.
5. Bua Refinery & Petrochemicals Ltd, Ntaikang, Akwa Ibom State
The project operated by Nigerian conglomerate, Bua Group, is a proposed conventional plant that will use the conversion cracking method to refine crude oil into petroleum products. It will be capable of capable of producing Polypropylene, Propane, Benzene, Butane, Gasoline, DPK, ATK, AGO, LPFO.
According to the media sources, DPR, gave the Bua group a Licence to Establish in September 2017, for the 150,000 bpd refinery. DPR says fund sourcing for the project is ongoing.
b. Modular Refineries ( Maximum: 25,000 bpd)
A modular refinery as the name implies, is a refinery whose parts or equipment are constructed in modules designed to be transported quickly and easily anywhere in the world. The components have been linked together to form an easily manageable process and they come in a variety of sizes with capacities that range from 500 to 20,000 barrels per day. Besides increasing the country’s refining capacity, the modular refinery initiative is also targeted at replacing illegal refineries in the Niger Delta.
The NNPC GMD announced in May last year that the government has given licenses to 13 firms to establish modular refineries. A total of 35 firms had expressed interest to establish the refineries but less than half of them got it. There are at least 21 Modular refineries that can realistically come onboard.
Below are the most prominent ones: