Nigeria’s crude oil refining capacity has taken a significant hit, reducing to a mere 6,000 barrels per day, according to the latest Annual Statistical Bulletin from the Organisation of the Petroleum Exporting Countries (OPEC).
This decline is nothing short of alarming, given that just five years ago Nigeria boasted an average refining capacity of 10,600 barrels per day. Presently, Nigeria has the lowest refining capacity among OPEC nations.
The nation’s continuous reliance on petroleum product imports has sparked growing concerns, despite the presence of government-owned refineries.
Even as countries like Saudi Arabia soar with the highest refining capacity among OPEC members, equivalent to 2.6 million barrels per day, Nigeria finds itself lagging behind, with Algeria, Angola, Congo, Gabon, Iran, Iraq, Kuwait, Libya, the United Arab Emirates, and Venezuela all outperforming Nigeria in refining capacity between 2018 and 2022, according to OPEC data.
The situation escalated when the Nigerian National Petroleum Company Ltd (NNPCL) discontinued the petrol subsidy regime in June due to escalating government expenditure on petrol imports.
Consequently, petrol prices skyrocketed from N189 per litre to a staggering N617 per litre.
The latest Premium Motor Spirit Price Watch Report for July 2023 revealed that petrol prices had surged by approximately 215% over the past year.
Despite massive investments of over N11.35tn in the country’s three moribund refineries within the last decade, the Federal Government has found itself depending heavily on the Dangote Refinery, in which it holds a 20% stake.
However, uncertainty shrouds the commencement of operations at the Dangote Refinery, casting doubts on the nation’s energy security.
The NNPCL’s spokesperson, Garba-Deen Muhammad, stated in June that they were compelled to import fuel as a necessity due to the state of the country’s refineries, emphasizing their interest in collaborating with Dangote Refinery as co-owners.
Yet, recent investigations revealed that the Dangote Refinery’s management remained uncertain about its start date. As the debate over the best way forward rages on, Adebowale Olujimi, CEO of Emadeb Energy, believes that resuscitating local refining is “the way to go,” considering that petrol importation is unsustainable.
Mike Osatuyi, National Controller Operations of the Independent Petroleum Marketers Association of Nigeria, agrees with the need for local refining but also suggests exploring alternatives like Compressed Natural Gas.
It’s clear that Nigeria faces a challenging road ahead in restoring its refining capacity and achieving energy security while grappling with fluctuating petrol prices.