Nigeria, others need to boost refining capacity – OPEC - Uju Ayalogu's Blog for News, Reviews, Articles and More

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Wednesday 30 December 2015

Nigeria, others need to boost refining capacity – OPEC

Nigeria, others need to boost refining capacity – OPEC

The Organisation of Petroleum Exporting Countries has highlighted the need for more refining facilities in Nigeria and other African countries to meet their growing demand for petroleum products.

OPEC, in its 2015 World Oil Outlook, said the inability to keep regional refinery output in line with growing product demand had led to sustained growth in product imports across the African continent.

“Africa is well positioned for downstream capacity additions. Currently, the region imports around 30 per cent of the refined products it consumes. This makes it, in relative terms, by far the largest net product-importing region,” the organisation stated.

The situation exists not only due to insufficient ‘nameplate’ refining capacity, but also because of very low utilisation rates in many of its facilities, the report said.

“With oil demand in the region continuing to grow and with many countries having domestic crude oil available for processing, there is evidently the need and potential for more refining facilities,” it added.

According to OPEC, there are currently only a few projects under construction or in an advanced planning stage in Africa. The largest project under construction is Angola’s Lobito refinery, which will result in the addition of 120,000 barrels per day of capacity coming on stream in 2019. The original design capacity of 200,000 bpd will be reached after the completion of the project’s second phase.

It noted that some capacity expansion could be forthcoming in Nigeria by 2020, either through the rehabilitation of existing refineries – in part to raise their utilisation rates – or through grassroots projects.

Only one of the nation’s four refineries, with a combined capacity of 445,000 bpd, is currently producing petroleum products.

The report stated, “Several refining projects have been announced and Nigeria is currently seeking partnerships with foreign investors for their implementation. However, as of the completion of this outlook, no final decision has been made yet regarding either capacity or timing.

“One project that may materialise in the medium-term is the grassroots 500,000 bpd Dangote refinery and the associated greenfield fertiliser plant in Lagos, Nigeria. If built, this refinery would be Nigeria’s first privately owned and operated refinery.”

Noting the abundant oil and gas resources on the continent, OPEC said, “Adding new refinery capacity is key and integrated refineries that produce fuel products, power and potentially fertilisers could play an important role.”

According to the report, today, Africa has 46 refineries with a total distillation capacity of 3.3 million bpd.

“Except for Libya’s Ras Lanuf refinery, there are no refineries in Africa with integrated petrochemical production, though some refineries have facilities for lubes and asphalt production,” the report added.

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