With scores of investors exploring the nation’s downstream market for opportunities, Nigeria will end refined petroleum products next year and join global exporters to compete in the market, especially in the sub-Saharan Africa market, industry analysts have projected.
Apart from the 650,000 barrel-a-day Aliko Dangote’s refinery project which is being fast-tracked to commence production by 2020, scores of other smaller refineries are also coming up that suggests clearly that Nigeria’s $7 billion yearly oil import bill may be saved and used for more productive areas of the economy if the projects come on stream as scheduled.
The position of the industry analysts is hinged largely on the elaborate liberalization of the downstream sector by the Federal Government exemplified by the licensing regime and other sundry measures being pursued by the Nigeria National Petroleum Corporation (NNPC) to attract mini refinery and modular investors to the sector.
The policy stance has continued to excite small investors who are now coming in droves to invest in mini refineries with as low capacity as 1000 barrels per day even as the NNPC is encouraging investors to join it as it moves to optimize the operations of the nation’s four refineries in order to meet their 445,000 barrels per day production capacity.
For instance, in August the state-owned oil corporation called for bids to build two refineries capable of processing 200,000 barrels a day of condensate.
In addition, modular refineries, including a 5,000 barrel-a-day plant being built by VFuels, a Houston-based company, for Waltersmith Petroman Oil Ltd in Lagos, are being promoted to bridge the local demand gap in refined products.
To brighten the downstream projects’ outlook further, the Bank of Industry (BoI) secured a $500 million loan from China in September for lending to modular refineries investors.
Commenting on the potential of the Dangote Refinery for the nation’s downstream market, a group executive director at Dangote Industries Ltd, Devakumar Edwin, had said last July that the project would help in ending Nigeria’s reliance on imported fuel when completed.
He said: “People still find it difficult to believe we can do it. We believe we can. We are so aggressively focused.”
If all the projects are completed and Nigeria’s existing refineries get the investment they need to raise utilization, the nation could end up exporting as much as 300,000 barrels a day of fuels next year, according to a PricewaterhouseCoopers study
The Minister of State for Petroleum Resources, Dr. Ibe Kachickwu, confirmed the increasing foray of investors into the nation’s downstream market recently.
According to him, of the 40 modular refineries registered, 10 are in advanced stages of development and could be producing fuel as early as next year
Kachikwu confirmed that the two leading projects of about 17,000 barrels a day each “have really started work.”
He expressed the hope that “if we succeed in stopping the importation of refined petroleum products, something I’m very committed to, we will be saving 30 to 40 percent of the foreign exchange in this country.”
A research conducted by PricewaterhouseCoopers (PwC) on the investments’ potential in the downstream market indicated that if all the projects got completed and Nigeria’s existing refineries raised the investment they need to raise utilization, the nation could be exporting up to 300,000 barrels a day of fuels by 2019.
