Nigeria’s modular refining segment is set for a sharp expansion next year, with seven new plants expected to start up and add a combined 83,000 barrels per day of processing capacity. The additions would bolster domestic petroleum-product supply as local refinery output rises and fuel consumption weakens.
Quick facts
- Four modular refineries were operating in Nigeria in September, with total capacity of 32,000 barrels per day.
- Seven further modular plants are expected to begin operations next year, bringing 83,000 barrels per day of additional capacity.
- Dangote’s 700,000-barrel-per-day refinery in Lekki is operating at a high utilisation rate, with stable gasoline production.
- Nigerian fuel demand has declined this year as flat prices increased.
- The only cited government action was an NNPC price reduction during the month.
- Ghana’s 45,000-barrel-per-day Tema refinery is raising production.
The expected start-up of the seven facilities would lift Nigeria’s modular-refining capacity to more than 2.5 times the level represented by the four plants running in September. Smaller refineries are therefore likely to play a larger role in supplying the country’s fuel market.
The projected expansion was outlined in Lagos during the OTL Africa Downstream conference, in a presentation examining Nigeria’s petroleum-products market. The discussion focused on rising domestic refinery capacity alongside softer demand for fuels.
Four modular operations had a combined nameplate capacity of 32,000 barrels per day in September. No details were provided on the names, ownership or locations of the seven proposed new refineries.
There was also no indication of the planned capacity for each project or their individual commissioning schedules. Even so, their aggregate capacity was put at 83,000 barrels per day.
Nigeria’s progress toward greater fuel self-sufficiency is being supported by increasing output from the Dangote Petroleum Refinery. That improvement is taking place despite a drop in domestic demand this year, linked to higher flat prices.
No broad government intervention in the petroleum market was identified during the period, apart from an NNPC price cut this month. The market is adjusting to higher local output as well as changing international trading and supply conditions.
The 700,000-barrel-per-day Dangote refinery at Lekki is running hard, while its gasoline production has remained stable. Strong output from the facility has reduced the commercial attraction of shipping certain refined products from Europe into West Africa.
Elsewhere in the region, Ghana’s 45,000-barrel-per-day Tema refinery is increasing throughput, strengthening the country’s ability to meet domestic fuel needs. At the same time, the economics of moving petroleum products from Europe to West Africa and from Europe to the United States have deteriorated, with freight charges adding pressure to both trade routes.
