In the heart of Africa’s largest economy lies a perplexing paradox that has left economists and policymakers scratching their heads. Nigeria, a nation blessed with abundant oil reserves, finds itself in the peculiar position of importing refined petroleum products from its continental neighbours. This story of contrasts paints a vivid picture of untapped potential and costly dependencies that continue to shape the country’s economic landscape.
As of 2023, Nigeria boasts a theoretical oil refining capacity of 1,122,000 barrels per day (bpd), with the lion’s share attributed to the newly established Dangote Group refinery at 650,000 bpd. This mammoth facility, alongside eight other refineries scattered across the country, should theoretically position Nigeria as a powerhouse in petroleum product production. Yet, the reality on the ground tells a different tale.
OIL REFINING CAPACITY BY COMPANY & LOCATION, 2023
1 🟣Dangote Group: 650K bpd
2 🟤New PHRC: 150K bpd
3 🟤WRPC, Warri: 125K bpd
4 🔴KRPC, Kaduna: 110K bpd
5 🔴PHRC, PH: 60K bpd
6 🟤Niger Delta Refining, Ogbele: 11K bpd
7 🟤OPAC, Kwale: 10K bpd
8 🟢Waltersmith Petroman Oil Ltd, Ibigwe: 5K bpd
9 🟤Edo Refinery & Petrochemicals, Benin: 1K bpd
(OPEC)
Despite this impressive capacity on paper, Nigeria found itself importing petroleum products worth over $243 million from other African countries in 2023. Togo and Tunisia, nations not typically associated with oil production, topped the list of suppliers, providing products valued at $109.3 million and $104.35 million respectively. This situation raises critical questions about the efficiency and operational status of Nigeria’s domestic refining capabilities.
The disparity between potential and actual production becomes even more stark when considering the diversity of Nigeria’s refining landscape. From the state-owned refineries in Port Harcourt, Warri, and Kaduna to smaller private operations like the Niger Delta Refining in Ogbele and Waltersmith Petroman Oil Ltd in Ibigwe, the country appears to have a robust infrastructure for meeting its domestic fuel needs. However, years of underinvestment, mismanagement, and technical challenges have left many of these facilities operating well below capacity, if at all.
This scenario has created a curious economic, where Nigeria exports crude oil only to import refined products at premium prices. The financial implications are staggering, with the country spending billions of naira on imports that could have been produced domestically. For instance, the N45.2 billion spent on imports from Togo alone could have been redirected towards revitalizing local refineries or investing in critical infrastructure.
The situation also highlights the interconnectedness of African economies. Countries like Côte D’Ivoire, Egypt, and even landlocked Niger have found a lucrative market in Nigeria’s petroleum needs. This trade, while beneficial for regional economic integration, underscores the urgent need for Nigeria to optimize its domestic production capabilities.
The Dangote refinery, with its massive capacity, represents a beacon of hope for reversing this trend. If operational at full capacity, it could potentially eliminate Nigeria’s need for petroleum imports and even position the country as a net exporter of refined products to the region. However, the challenge lies in translating this potential into reality, a task that requires not just technical expertise but also political will and effective management.
AFRICAN COUNTRIES NIGERIA IMPORTED PETROLEUM OIL FROM, 2023
1. 🇹🇬Togo: $109.3 million ≈ N45,223,500,000
2. 🇹🇳Tunisia: $104.35 million ≈ N43,299,250,000
3. 🇨🇮Côte D’Ivoire: $24.84 million ≈ N10,291,600,000
4. 🇪🇬Egypt: $4.76 million ≈ N1,978,600,000
5. 🇿🇦South Africa: $414,000 ≈ N171,810,000
6. 🇬🇭Ghana: $128,000 ≈ N53,120,000
7. 🇳🇪Niger: $122,000 ≈ N50,630,000
8. 🇳🇦Namibia: $6,000 ≈ N2,490,000
(TRADEMAP)
As Nigeria grapples with this paradox, the story serves as a poignant reminder of the complexities involved in harnessing natural resources for national development. It underscores the critical need for sustainable policies, efficient management of resources, and strategic investments in key sectors of the economy.
The path forward for Nigeria is clear yet challenging: revitalize its domestic refining capacity, reduce dependency on imports, and transform its oil wealth into tangible economic benefits for its citizens. As the nation stands at this crossroads, the decisions made today will undoubtedly shape its economic trajectory for years to come. The question remains: Can Nigeria unlock its refining potential and rewrite its petroleum narrative, or will it continue to be a land of paradoxes in the global oil market?
