Seven proposed modular refineries with a combined capacity of 83,000 barrels per day are expected to begin operations in 2027, as rising domestic production reshapes Nigeria’s petroleum products market.
Nigeria’s domestic refining industry is projected to expand in 2027, with seven new modular refineries expected to commence operations at a combined capacity of 83,000 barrels per day.
George Maher-Bonnett of Argus Media disclosed the projection on Wednesday during a presentation at the OTL Africa Downstream conference in Lagos. His presentation, titled African Energy Outlook, examined developments in Nigeria’s petroleum products market amid increasing local refining capacity and changing fuel consumption patterns.
According to Maher-Bonnett, Nigeria had four operational modular refineries in September, with a combined processing capacity of 32,000 barrels per day.
He noted that seven additional modular facilities were expected to begin operations the following year, potentially increasing the contribution of smaller refineries to the country’s domestic petroleum supply.
If the projected facilities commence operations as anticipated, their combined capacity of 83,000 barrels per day would be more than two and a half times the capacity of the four modular refineries operating in September.
However, the presentation did not identify the seven proposed facilities, their owners or locations. It also did not provide individual capacity figures or specific commissioning dates.
Dangote Refinery Strengthens Domestic Supply
Maher-Bonnett also highlighted the growing influence of the Dangote Petroleum Refinery in improving Nigeria’s ability to meet domestic demand for refined petroleum products.
The presentation described the 700,000-barrel-per-day refinery in Lekki as operating at a high rate, with steady petrol production.
According to the report, increased output from the facility is improving domestic self-sufficiency and reducing the commercial attractiveness of importing certain petroleum products from Europe into West Africa.
The expected expansion of modular refineries could further support local supply by increasing the number of domestic facilities processing crude oil into petroleum products.
Higher Fuel Prices Weigh on Demand
Despite the increase in domestic refining activity, Nigeria’s fuel demand has declined during the year, according to the Argus Media presentation.
Maher-Bonnett attributed the reduction partly to higher prices, which have affected consumption patterns in the domestic market.
The presentation also noted that the only government intervention identified during the period under review was a price reduction by the Nigerian National Petroleum Company Limited (NNPC).
The combination of higher fuel prices, changing consumption patterns and increased local production is reshaping the dynamics of Nigeria’s petroleum products market.
Ghana Also Expands Its Refining Capacity
The presentation highlighted developments in Ghana’s refining industry, noting that the 45,000-barrel-per-day Tema refinery was increasing production and contributing to the country’s efforts to improve domestic supply.
Maher-Bonnett also discussed changing trade economics for petroleum products moving between Europe and West Africa, as well as between Europe and the United States.
According to the presentation, the economics of these shipping routes had weakened, with freight costs adding further pressure to their competitiveness.
These developments could influence petroleum product trading patterns as West African countries increase their refining capacity and rely more heavily on locally produced supplies.
Modular Refineries Expected to Play a Bigger Role
The projected commissioning of seven additional modular refineries represents a potential expansion of Nigeria’s domestic processing capacity at a time when the market is adjusting to higher local production and changing international trade flows.
Together with the Dangote refinery and other domestic facilities, the proposed projects could increase the availability of locally refined petroleum products.
However, the extent of their contribution will depend on whether the facilities begin operations as projected and achieve their anticipated production levels.
