Talks Continue as Nigeria Plans Upgrades, Three Greenfield Refineries to Reduce Fuel Imports

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Written by Richard Finlayson, Senior International Editor for Industrial Info--Nigeria is the world's eighth-largest oil exporter, with more than 2 million barrels per day. But because of inefficient refining capacity, the country imports 85% of refined petroleum products at a cost of more than $10 billion per year and spends another $1 billion on imported fertilizers and agricultural chemicals.

There are four major refineries in the country: Port Harcourt, Rivers State, which has an original design capacity of 150,000 barrels per day (BBL/d); Warri, with 125,000 BBL/d; Port Harcourt Alesa Elemi, with 120,000 BBL/d; and Kaduna, with 110,000 BBL/d. But due to a lack of maintenance and poor operational management, plus what the Nigerian National Petroleum Corporation (NNPC) calls "problems with feedstock," only 30% (about 151,000 BBL/d) of the 505,000-BBL/d potential is being produced.

Speaking to the media at a recent African Refiners Association meeting in Cape Town, South Africa, the NNPC executive director for refining and petrochemicals, Philip Chukwu, said that a complete upgrade and refurbishment of the refineries should be completed by the end of 2012, and this would double production to more than 300,000 BBL/d. He said that this extraordinary maintenance project would look at all the things that went wrong over the years and would begin to fix them. He added that equipment is being procured, and the upgrades would be followed by routine maintenance.

He also said that plans for three new refineries with a combined production capacity of 885,000 BBL/d and a total investment of $25 billion were still at the conceptual stages; although NNPC had said earlier that the plants would be constructed by 2014, Chukwu said he did not feel able to give a completion date. NNPC was still discussing concepts with partners, and no funding arrangements had been finalized.

In May 2020, it was reported that NNPC had signed a memorandum of understanding with the China State Construction Engineering Corporation (CSCEC) for the $28.5 billion development of three greenfield refineries and a petrochemical complex, producing a combined total of 2 million BBL/d. The projects were expected to be financed by China Export and Credit Insurance Corporation (SINOSURE) and a consortium of Chinese banks. There was no international tender for the projects, and it was believed that the construction would be paid for by exports of refined petroleum, which secure resources for China.

Major proposed projects in Nigeria's power and hydrocarbon energy sectors have almost always been shaken apart by stop/start schedules induced by political and regional forces. Funds have been allocated and drained away, and proposals have been recycled a number of times. The national and presidential elections have just been postponed for a week, giving the population a desperate sense of déjà vu. The recently announced major gas plan and the three new refineries probably will wait for progress reports until the post-election dust has settled.

For related news, see March 7, 2011, article - Nigeria's Oil and Gas Industry Bill Could Create $680 Billion in Revenues, and March 28, 2011, article - Nigeria's Gas Plan Promises 10 Petrochemical and Fertilizer Plants by 2014.

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