26/01/2022
Following this week’s announcement that the Dangote Refinery is now complete, and the facility is expected to come into operation in Q4 with a processing capacity of 540kbbl/d, we have updated our outlook for the Nigerian refining sector.
At present, Nigeria has plans for almost 1.789mn bbl/d of refining capacity across projects to rehabilitate existing facilities and the establishment of greenfield conventional and modular refineries.
“Since the NNPC units at Port Harcourt, Kaduna and Warri were taken offline for long overdue maintenance in 2019, Nigeria’s state refining capacity has been zero. That maintenance work only kicked off in mid-2021 and is unlikely to bear fruit until 2023. However, the downstream sector has received a meaningful boost over the past 14 months from the successful implementation of several modular refinery projects integrated with oilfield developments. These facilities have a current capacity of 22kbbl/d, and account for Nigeria’s full active refining slate. The launch of Dangote will steal the limelight and turn the country from a refined products importer to an export overnight, but the success and importance of modular refineries should not be overlooked.
2022 promises to be a watershed moment for Nigeria’s downstream sector with the addition of three more modular units (16.5kbbl/d) and Dangote giving a theoretical refining throughput of around 579kbbl/d by year-end, rising to 689kbbl/d when the latter completes commissioning.
Figure 1. Make-up of Nigeria’s planned refinery expansion
The Central Bank of Nigeria estimates that it will save around 30% of its existing forex expenditure thanks to the Dangote Refinery alone, with the facility’s integrated petrochemical unit saving another 10% when it comes into operation. Meanwhile, whoever replaces President Muhammadu Buhari after next year’s election will hope that these newfound refining capabilities will finally enable Abuja to leverage domestic products to ease reliance on costly subsidies.”
Ian Simm, Principal Advisor, IGM Energy Ltd – ian@igmenergy.com
Figure 2. Refinery projects with work underway or an active licence as of January 2022
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