Nigeria’s Modular Refining Sector Set For Major Boost As Seven New Refineries Target 2027

Nigeria’s modular refining industry is expected to experience significant expansion next year, with seven additional refineries projected to commence operations and contribute a combined capacity of 83,000 barrels per day.

The anticipated development is expected to strengthen local petroleum production, increase domestic refining capacity and improve the contribution of smaller refineries to the country’s fuel supply.

According to Bush Radio Academy, George Maher-Bonnett of Argus Media disclosed the projection during a presentation at the OTL Africa Downstream conference in Lagos, where he examined developments in Nigeria’s petroleum market amid increasing domestic production and declining fuel demand.

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

He added that seven more facilities were expected to begin operations next year, bringing an additional 83,000 barrels per day into the country’s modular refining sector.

The projected expansion would increase the sector’s combined capacity to more than two and a half times its September level.

However, the presentation did not identify the proposed refineries, their owners or locations. It also did not provide details of their individual processing capacities or specific dates for commissioning.

Maher-Bonnett also highlighted the growing influence of the Dangote Petroleum Refinery in Nigeria’s efforts to achieve greater self-sufficiency in petroleum products, despite a decline in domestic fuel consumption this year.

The presentation attributed the reduction in fuel demand partly to higher flat prices, while noting that increasing production from the Dangote facility was improving Nigeria’s domestic supply position.

It further projected that modular refineries would play a more significant role in meeting the country’s petroleum requirements as additional facilities become operational.

On government intervention in the petroleum sector during the period under review, the presentation noted that there had been no major intervention apart from a price reduction by the Nigerian National Petroleum Company Limited (NNPC) during the month.

The anticipated increase in refining capacity comes as Nigeria’s petroleum market continues to adjust to rising local production and changing international supply and trading conditions.

Maher-Bonnett observed that the Dangote refinery, with a processing capacity of 700,000 barrels per day in Lekki, Lagos, was operating at a high rate, while its petrol production remained steady.

The development has reportedly reduced the attractiveness of importing certain petroleum products from Europe into West Africa.

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

It further highlighted weakening trade economics for transporting petroleum products from Europe to West Africa and from Europe to the United States, with freight costs contributing to the challenges affecting those routes.