Nigeria To Become Net Exporter Of Refined Fuel By 2019

Nigeria To Become Net Exporter Of Refined Fuel By 2019

By 2019, Nigeria will become Africa’s 3rd largest refiner of petroleum products and a net exporter of refined petroleum products, with exports estimated to exceed 37,000 b/d (approximately 6 million litres daily), according to a report, Nigeria’s Refining Revolution, obtained from PricewaterCooper, PwC.

The report shows that modular refineries will do the job of bridging the supply gap of 53,000 bpd, (approximately 8.5 million litres daily) in Nigeria.

At the end of the day, will become West Africa’s refining hub by 2019, supplying the region with at least 37,000 b/d.

By 2026, Nigeria’s exports to the region will exceed 130,000 bpd (approximately 21 million litres daily), reducing the region’s imports from US and Europe by approximately 80 percent, according to the report.

Nigeria’s refining sector is currently not operating at full potential, and laudable attempts are being made by the current administration to drive private investment.

These include plans to upgrade existing refineries and the issuance of 25 refining licenses (conventional and modular) to indigenous companies.

These initiatives, if executed rigorously, according to PwC, will drive growth and reforms within the sector in the medium to long term.

Roles Dangote, 25 newly issued licenses will play in the growth

Data obtained revealed that the combined capacity of the 25 candidate refineries stands at approximately 1.6 million b/d.

Three of the licensed companies will construct conventional stick-build plants with capacity estimated at over 850,000 bpd, while 22 licenses are to construct modular units estimated at about 700,000 b/d in combined capacity.

The scenarios painted by PwC through which Nigeria can attain the great feat, are based on some forward assumptions about refining in Nigeria and the West Africa region.

“Our outlook illustrates the potential of the sector with focus on the volumes that modular refineries can contribute to bridging the supply gap in the country and regionally”, it said.

The 650,000 b/d Dangote refinery, is expected to come on-stream by 2019. At optimal utilisation, the refinery is capable of meeting the country’s demand, however, a major headwind to achieving a fully optimised run, is availability of crude feedstock. At full capacity, the refinery will require about 19 (1 million barrel) cargoes of crude monthly, approximately half of Algeria’s (third largest producer in Africa) production.

For the initial years of operation, availability of crude feedstock may be a significant challenge. Therefore, the current supply gap within the country and region creates an opportunity not just for conventional refineries such as the Dangote refinery but also for modular refineries which will be set up primarily to meet domestic demand. This provides the “bottom-up” supply into the fuels value chain.

Another critical assumption is that the modular refineries yield will be limited to fuel oils and diesel as the lightest hydrocarbon produced.

If Dangote refinery (650,000 b/d) opens its gates mid-2019, and operates at 50% utilisation, existing refineries (445,000 b/d) are operating at 15% utilization and modular refineries (combined capacity of 100,000 bpd) also come on stream early 2019, will operate at 90% utilization. These ramp up to 70%, 20% and 90% respectively by 2030.

Net effect

According to PwC, by 2019, Nigeria becomes Africa’s 3rd largest refiner of petroleum products and a net exporter of refined petroleum products.

Its exports are estimated to exceed 37,000 bpd (approximately 6 million litres daily).

The modular refineries bridge a supply gap of 53,000 bpd (approximately 8.5 million litres daily) in Nigeria.

Nigeria becomes West Africa’s refining hub by 2019, supplying the region with at least 37,000 bpd (approximately 6 million litres daily).

By 2026, Nigeria’s exports to the region exceed 130,000 b/d (approximately 21 million litres daily), reducing the region’s imports from US and Europe by approximately 80%.

If Dangote refinery’s 650,000 bpd, production starts by mid-2019, operating at 50% utilisation, existing refineries (445,000 b/d) are operating at 20% utilization and modular refineries (combined capacity of 200,000 b/d) also come on stream early 2019, operating at 90% utilization.

These ramp up to 90%, 30% and 90% respectively by 2030.

Then, with production figures exceeding 590,000 bpd (approximately 94 million litres daily), Nigeria becomes the largest producer of refined products by 2019. Its exports are estimated to exceed 150,000 bpd (approximately 24 million litres daily) by 2019.

The modular refineries bridge a supply gap of 30,000 bpd (approximately 5 million litres daily) in Nigeria.

By 2023, West Africa becomes self-sufficient with over 70,000 bpd (approximately 11 million litres daily) being traded to other regions.

If Dangote refinery (650,000 b/d) opens its gates mid-2019, operating at 60% utilization, existing refineries (445,000 b/d) are operating at 20% utilization and modular refineries (combined capacity of 300,000 b/d) also come on-stream early 2019, operating at 90% utilization. These ramp up to 90%,

70% and 90% respectively by 2030.

By the turn of the decade, Nigeria assumes the status of the largest producer of refined petroleum products in Africa. Its exports exceed 300,000 b/d (approximately 48 million litres daily) by 2019.

In the same year (2019), West Africa becomes self-sufficient, eliminating the need to source for refined products from US and Europe.

Nigeria then becomes an international trading hub similar to Asia Pacific, North West Europe and US Gulf Coast (USGC), the report said.

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