The Organization of Petroleum Exporting Countries (OPEC) has said that Nigeria is set to witness the set-up of small modular refineries with a capacity of 20,000 barrels per day each in the medium term. The organization stated this in its World Oil Outlook which was held in Saudi Arabia.
According to the Outlook, estimates suggest that Africa will experience medium-term distillation capacity additions of 1.2 million barrels per day (mb/d). A significant portion of this increase is attributed to Nigeria’s Dangote refinery, which accounts for 650 thousand barrels per day (tb/d) of much-needed capacity expansion in the country.
The refinery was officially inaugurated in May 2023 with commercial operation slated to start this October (diesel and aviation fuel) and in November 2023 (petrol refining). The Outlook further stated that, one of the major obstacles Nigeria currently face comes from funding challenges for modular refineries and the increasing incidents of sabotage attacks on oil pipelines, as well as oil theft.
Chairman of the Crude Oil Refineries Association of Nigeria (CORAN), Momoh Oyarekhua, highlightedl solutions during an Arise News interview: support for modular refineries, by pointing out the expenses linked to sending crude oil abroad for refining and then importing the refined products.
Adding that, this process involves costs to clearing refined petroleum products at the terminal, port charges, and the involvement of middlemen in transporting products to Lome, from where they are then shipped into Nigeria.
Nigeria needs modular refineries to produce and purchase crude oil in Naira, aligning with their income being generated in Naira from selling products in the Nigerian domestic market. This approach aims to reduce the burden on the Forex market.