Nigeria Looks To Ramp Up Its Oil Refining Capacity

Nigeria, Africa’s largest crude oil producer and exporter, expects to end its crude-for-fuel swap deals by 2023 when its refining capacity is set to increase with state refineries revamped and a new refinery built, Mele Kyari, Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), said.

Nigerian refineries, which are in need of refurbishment, will be fully revamped and running by 2023, Nigeria’s ThisDay outlet reported, quoting Kyari as speaking at a virtual refiners’ conference this week. The private refinery of Nigerian billionaire Aliko Dangote is also expected to be operational by then, Kyari said.

“I don’t see an extension of that process in the near future as we progress and transit into more production locally. Our plan is to deliver all of them by 2023,” NNPC’s top executive said, referring to the crude-for-product swap deals.

Since 2016, Nigeria has been running the so-called Direct Sale of Crude Oil and Direct Purchase of Petroleum Products (DSDP) program with major oil traders and international oil companies, aimed at ensuring fuel which Africa’s biggest crude oil producer cannot process domestically.

At the same conference this week, NNPC’s Kyari said that “The outlook for Nigeria's downstream sector looks bright with attractive market conditions, large market, significant crude distillation capacity additions from various refinery projects, improvements of the distribution network & the use of natural gas.”

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“The rehabilitation exercise involves working with Globally Reputable Engineering Procurement and Construction Companies (EPCs) to revamp the existing refineries to operate at world-class capacity utilization levels,” he said.

Last month, Kyari said that NNPC was in talks to hand over the majority stakes in Nigeria’s four refineries, which are all in dire need of an upgrade.

Nigeria has four refineries, two in Port Harcourt, and one each in Warri and Kaduna, but all refineries are very old and in need of refurbishment. Over the past five years, utilization rates at those refineries haven’t exceeded 30 percent.

By Tsvetana Paraskova

Oilprice.com