Nigeria is reportedly close to building small modular refineries with a daily processing capacity of 20,000 barrels, according to projections made by the Organisation of Petroleum Exporting Countries (OPEC).
The most current edition of OPEC’s World Oil Outlook, which was introduced in Saudi Arabia, included these predictions.
The research also stated that an additional 1.2 million barrels per day of distillation capacity are anticipated to be added in Africa over the next few years.
This growth is mostly due to Nigeria’s Dangote refinery, which is expected to provide 650,000 barrels per day and so enhance the nation’s refining capacity.
The Dangote refinery was formally inaugurated in May 2023, and commercial operations are yet to start this month for the refining of diesel and aviation fuel. The refining of petrol is anticipated to follow in November 2023.
In addition, the research observed,
“Moreover, Nigeria is set to witness several small modular refineries established in the medium term, with capacities of up to 20 thousand barrels per day (tb/d) each.”
Despite the optimistic prognosis painted by these estimates, Nigeria confronts a number of challenges along the way, most notably finance issues for modular refineries and an uptick in cases of pipeline sabotage and oil theft. These difficulties seriously impede overall advancement and operational effectiveness.
In a recent interview with Arise News, Momoh Oyarekhua, Chairman of the Crude Oil Refineries Association of Nigeria (CORAN), suggested a potential fix.
He emphasised the need to support modular refineries, as doing so may, in turn, result in Nigerians’ fuel prices becoming cheaper by removing numerous associated expenditures.
He focused in particular on the costs of shipping crude oil overseas for refinement before bringing back the finished goods.
Notably, the Nigerian National Petroleum Company (NNPC) Limited’s Group Chief Executive Officer, Mele Kyari, announced a change in the company’s petroleum import policy as of last week.
After encouraging independent marketers to handle fuel imports for a short period of time, NNPC has returned to being the only importer of petroleum in the nation.
The shift is ascribed to Nigeria’s lack of foreign currency, which has limited private marketers’ ability to import petroleum despite having the necessary licences.
CORAN Chairman Oyarekhua emphasised the significance of modular refineries buying crude oil in Naira in the aforementioned Arise News interview, correlating with their revenue earned in the same currency through domestic product sales.
By using this strategy, the Forex market’s pressure will be reduced. He cited as an example the case in which 40 modular refineries, each with a 10,000 barrel-per-day capacity, would otherwise need to buy crude oil in USD, resulting in exorbitant monthly costs.
As a result, a streamlined approach to feedstock procurement is consistent with the stability and economic interests of Nigeria.
OPEC, the Organisation of Petroleum Exporting Countries, has been a key participant in global energy issues since its inception on September 14, 1960, in Baghdad, Iraq.
OPEC was created in 1970 by Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela with the goal of coordinating petroleum policies and ensuring fair and stable oil prices for its members.
OPEC’s membership has grown throughout the years to include several other oil-producing countries.
The organization’s history is defined by watershed periods, such as the 1970s oil crisis, when an embargo spearheaded by OPEC produced a jump in oil prices and had a huge impact on the global economy.
Despite persistent obstacles such as internal conflicts and competition from non-OPEC oil producers, OPEC remains a crucial player in influencing oil production and pricing dynamics.