According to estimates by The Punch, Nigeria spent more than ?11 trillion (about $25 billion) between 2010 and 2023 on refinery rehabilitation projects, yet the facilities remain largely unreliable. The Port Harcourt refinery briefly restarted in late 2024 but was shut down again by May 2025 due to performance issues.
Nigeria has chosen to walk away from purely contractor-led repairs to a Technical Equity Partnership (TEP) model wherein partners share technical expertise and financial risk. TEP is a collaborative business model where a partner provides both specialized technical expertise and equity capital to a project or company, rather than just acting as a contractor or pure financier. This model is frequently used in large-scale industrial projects such as oil refinery rehabilitations or mining operations to ensure the partner has "skin in the game" regarding both the operational success and the financial performance of the venture.
However, industry analysts and energy experts in Nigeria have raised significant concerns regarding the technical expertise of the Chinese firms selected by the NNPC for rehabilitating the Port Harcourt and Warri refineries, pointing out that neither has a known track record in large-scale refinery rehabilitation.
To wit, Sanjiang Chemical Company Limited is a petrochemical firm primarily focused on ethylene oxide, ethylene glycol and surfactants rather than crude refining while Xingcheng (Fuzhou) Industrial Park is focused on industrial park management, investment facilitation and infrastructure development. Both firms are private entities rather than major Chinese state-owned engineering firms with specialized refinery rehabilitation experience. Groups like the Nigeria Employers’ Consultative Association (NECA) and PENGASSAN have called for transparency or outright privatisation, arguing that decades of government-led "Turnaround Maintenance" (TAM) have failed to stop fuel scarcity.
Nevertheless, Nigeria’s energy sector is now being reshaped by new dynamics despite these setbacks.
The giant, 650,000-barrel-per-day (bpd) Dangote Refinery has fundamentally transformed Nigeria's energy landscape, shifting the nation from a massive importer of petroleum products to a net exporter. In March 2026, Nigeria officially became a net exporter of petrol, driven by the Dangote refinery's capacity to process roughly 565,000 bpd and generate a consistent surplus. The refinery produces around 57 million litres of petrol daily, exceeding the national consumption of approximately 46 million litres. This has helped the West African country to dramatically cut fuel imports, with daily petroleum imports dropping from over 42 million litres in December 2025 to just 3 million litres by February 2026. The Dangote refinery has started exporting petroleum products, managing to ship over 456,000 tonnes (12 cargoes) by March to various African countries, including Togo, Niger, Angola, Cameroon, Tanzania, Ghana and Ivory Coast.
Despite the high production capacity, the Dangote refinery has faced challenges in sourcing sufficient local crude, necessitating the import of international oil, including from the US and Brazil with local producers only supplying ~30% of its needs. International oil companies (IOCs) like NNPC often prefer exporting crude due to higher profits, passing on excessive costs to the refinery through traders. Despite the Petroleum Industry Act aimed at ensuring local supply, legal, regulatory, and production issues in the Niger Delta have hindered the mandated supply to the refinery. Meanwhile, whereas the refinery has been able to reduce foreign exchange expenditure on fuel imports, it has yet to fully insulate the country from global oil price volatility, with domestic fuel prices still seeing increases as global oil prices surge. Indeed, Nigeria’s reliance on deregulated, imported fuel has led to domestic retail prices for gasoline surging by nearly 50%.
On the other hand, Nigeria’s economy is experiencing an "oil paradox" due to high global prices triggered by the U.S.-Israel-Iran conflict, generating significant government revenue windfalls while simultaneously driving up domestic fuel costs and inflation. Indeed, the war in Iran has acted as a catalyst for Nigeria’s oil sector, creating a significant revenue windfall of an estimated N5.13 trillion, or nearly $4 billion, in March and April due to surging crude prices, significantly increasing Nigeria's foreign exchange earnings.
Nigeria’s signature Bonny Light crude was trading at ~$110/barrel on Monday, more than 50% above the 2025 average price. Produced in the Niger Delta basin, Bonny Light crude is a high-grade, premium Nigerian crude oil, prized for being light and sweet, with low API gravity and very low sulfur content. The crude grade is used to produce high yields of gasoline, diesel and jet fuel.
By Alex Kimani, oilprice.com
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