Nigeria Targets 2.6 Million Barrels per day Refining Capacity

The Department of Petroleum Resources (DPR) has granted licenses to 22 private firms to establish refineries in Nigeria in order to increase the country’s refining capacity by 1.97 million barrels per day in the short, medium and long period. This will boost capacity from 445,000 barrels per day to 2.62 million barrels per day and save over $15 billion yearly from the importation of petroleum products.
According to the DPR, the Federal Government hoped to achieve 50 per cent domestic refining capacity by 2020, through a combined policy of deregulation and rehabilitation of aging plants. To achieve this vision, the DPR, in its yearly report on the oil and gas sector stated that so far, the agency “has issued 22 Licenses to Establish (LTE) and three Approvals to Construct (ATC) refineries, respectively for modular Refineries projects. The projects have cumulative potentials to boost the domestic refinery capacity by more than 671,000BPSD on completion.”
Already, nine companies have submitted bids for co-location of new refineries within the complexes of Nigeria’s three existing refineries in Kaduna, Warri and Port Harcourt. These are expected to increase the nation’s refining capacity from 445,000 barrels per day (bpd) to 650,000bpd. Also, one of the 25 LTE holders, Dangote Oil Refinery Company (DORC) has progressed the refinery development project to the equipment fabrication stage.
The agency stated in its annual report that: “The modular refinery model is now emerging as a credible solution to the dismal share of domestic refineries. The model is gaining credence due to its comparatively lower establishment and running costs. Compared to bigger refinery projects, the modular solution appeals more to the marginal upstream producers desiring maximisation of assets value through local refining of produced oil.
According to the DPR, growing the domestic refining capacity would reduce the dependence on foreign products, boost local content, generate new jobs and develop requisite competencies in the ancillary sectors. “It would also free the foreign exchange market from undue demand pressures of petroleum products imports,” it added.
The agency said the future of the domestic refinery sector would be greatly improved through policy consistency, secured crude oil supplies and improved infrastructure. “Government is committed to tackling all the associated challenges facing the effective development of the domestic refinery sub-sector by promoting the business-friendly environment that is capable of driving the growth that will ensure the emergence of Nigeria as a refining hub in Africa,” it added.