Page 4 - DMEA Week 21 2022

DMEA COMMENTARY DMEA

Despite recent issues, Nigeria

talks up refining ambitions

Nigeria has unveiled an optimistic new refining roadmap.
While none of the projects are ‘new’ , the ambitious timeline is.

AFRICA NIGERIAN officials spoke optimistically this success of these plans. Following a meeting with
week about their ambitious plans for refining President Muhammadu Buhari in April, Aliko
expansion amid calls for the build-out of the Dangote said that the $19bn plant should be
WHAT: country’s midstream. completed by the end of the current adminis-
With a current capacity of While refinery capacity is limited to several tration. “By the grace of God, Mr President will
just 16,000 bpd, Nigeria small modular units that have in recent months come and commission it (the refinery) before the
is planning to reach complained about a lack of feedstock, Abuja is end of his term next year.”
1.4mn bpd by 2027. adamant it can rapidly turn around its poor per- Meanwhile, Dangote Group executive for
formance in the downstream sector. strategy, capital projects and portfolio devel-
WHY: Though multi-billion-dollar repairs are being opment Devakumar Edwin, said in late March
The country has long carried out on the Nigerian National Petroleum that “75% hydraulic testing ... as well as 70% of
suffered from a lack of Corp.’s (NNPC’s) full 445,000 barrel per day electrical cable fitting have been completed pre-
efficient opportunities to (bpd) slate which is currently sitting idle, the paratory to the completion of the refinery in the
integrate its world-class majority of the increase is seen coming from fourth quarter of this year.” NNPC owns a 20%
upstream with facilities the private sector, which also has a patchy track stake in the project and managing director Mele
that can produce record. Kyari said this week he expects it to start up in
products for domestic Q1 2023.
consumption. Target setting In a recent ratings announcement though,
Looking to support local communities, create Fitch said that it anticipates that the refinery will
WHAT NEXT: jobs, shelter the country from fuel market vola- start production in the second half of 2023, and
The success of the tility and wean itself off costly fuel subsidies and “conservatively assumes a six-month delay in
programme will largely imports, the Ministry of Petroleum Resources production ramp-up versus management expec-
be determined by the (MPR) has unveiled a Refining Roadmap that tations with an average gross refining margin of
completion and start- entails an increase in capacity to 1.4mn bpd by $10 per barrel”.
up of the long-awaited 2027 from the current level of just 16,000 bpd. Progress on rehabilitating the state refineries
Dangote Refinery. While almost 80% of the increase is seen appears to be moving in a similar direction. In
coming from the rehabilitation of the four state- April, Nigerian Minister of State for Petroleum
owned refineries and the launch of the giant Resources Timipre Sylva said that the first phase
Dangote unit, a hike of nearly 300,000 bpd is of ongoing repair work at the 210,000 bpd Port
envisaged from smaller private plants. Harcourt Refining Complex (PHRC) should
Outlining the repair of state-run refineries be completed in early 2023, offering a figure of
and the provision of ‘strategic support’ for the 60,000 bpd by April.
development of privately owned greenfield and PHRC comprises a 60,000 bpd unit built in
modular units, Simbi Wabote, executive secre- 1965, known as Area 5, and a newer unit built in
tary of the Nigerian Content Development and 1989 capable of processing 150,000 bpd of crude.
Monitoring Board (NCDMB), said: “Combined It has been offline since 2019 amid reports that
refining capacity of more than 1.4mn bpd is no comprehensive turnaround maintenance
expected from these focus areas within the next (TAM) had been carried out for as long as 40
five years.” years.
He continued: “About 400,000 bpd is Having secured a $1bn loan from Cai-
expected from the rehabilitation of NNPC ro-based African Export-Import Bank (Afrex-
refineries in Port Harcourt, Warri and Kaduna imbank) in February 2021, the Nigerian
using target performance of not less than 90% government awarded a $1.5bn contract to Italy’s
of nameplate capacity. The greenfield element Maire Tecnimont two months later covering the
of the roadmap covers the 650,000 bpd Dangote engineering, procurement and construction
Refinery in Lagos and the 200,000 bpd BUA (EPC) work to revive the refinery.
Refinery in Akwa Ibom.” The original plan was to achieve 90% of its
Accounting for more than 45% of the total, nameplate capacity by 2023, with the second and
the Dangote plant will clearly be key to the third phases six and 26 months later respectively.

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