OPEC has singled out Nigeria, one of Africa’s leading oil producers, as the least refining member within the organization, with an average equivalent refining capacity of 10,600 barrels per day (bpd) over a span of five years. According to the latest OPEC Annual Statistical Bulletin 2023, Nigeria’s refining output stood at 33,000 bpd in 2018, 8,000 bpd in 2019, 1,000 bpd in 2020, 5,000 bpd in 2021, and 6,000 bpd in 2022.
Conversely, Saudi Arabia emerged as the top refining OPEC member, maintaining an average equivalent of 2.6 million barrels per day (mb/d) during the same period. Saudi Arabia’s refining output was as follows: 2.8 mb/d in 2018, 2.6 mb/d in 2019, 2.3 mb/d in 2020, 2.5 mb/d in 2021, and 2.9 mb/d in 2022. It is noteworthy that Saudi Arabia boasts five operational refineries, whereas Nigeria has four, including state-owned and privately owned facilities.
Despite being an oil-producing nation, Nigeria continues to import petroleum products from the global market. This practice is attributed to inconsistent policies, a lack of long-term funding, challenges in securing foreign exchange, and obtaining feedstock necessary for the construction of new refineries. In the past, potential investors were enticed to invest in refineries because they were permitted to participate in crude oil lifting. However, these investors faced obstacles such as a lack of long-term funding and foreign exchange for imports, along with concerns regarding sustainable crude oil supply.
Energy industry experts interviewed by Vanguard emphasized the difficulties faced by investors in Nigeria’s refining sector. These issues include a lack of funds, challenges in obtaining feedstock, and security concerns in a lawless environment. According to Dr. Felix Amieyeofori of EnergyHub Nigeria, promoters of refinery projects have the right to reapply for licenses. Mazi Colman Obasi, National President of the Oil and Gas Service Providers Association of Nigeria, mentioned that a lawless environment, lack of rule of law, insecurity, and election irregularities deter reasonable investors from investing in Nigeria. Dr. Layi Fatona, former Managing Director of Niger Delta Petroleum Resources, highlighted the need for unwavering focus and determination in executing projects in Nigeria.
The Minister of State for Petroleum Resources, Oil, Heineken Lokpobiri, expressed optimism that the Federal Government would end fuel importation by 2024. During an inspection of the Port Harcourt Refining Company, Lokpobiri stated that the Port Harcourt Refinery would be fully operational by the end of 2023, followed by the Warri refinery in the first quarter of the next year and the Kaduna refinery toward the end of the subsequent year. He emphasized the government’s objective to cease fuel importation and enhance the supply of fuel, which would contribute to a better economy for Nigeria.