Nigeria's routes to energy independence: The best bet is the Dangote refinery

  • Nigeria has four oil refineries, all of which are not currently operating, with a total capacity of 420,000 barrels/day
  • US$1.5bn has been approved for revamping Port Harcourt's refineries, but Dangote refinery is a more likely game-changer
  • The massive new Dangote facility will save Nigeria FX and could reduce subsidy costs; the benefits outweigh the risks
Nigeria's routes to energy independence: The best bet is the Dangote refinery

Nigeria has four full-scale oil refineries, all owned by the government, with a total crude refining capacity of 420,000 barrels per day (bpd) – two in Port Harcourt (210,000bpd), one in Warri (125,000bpd) and one in Kaduna (110,000bpd). However, all of them have been shut since 2019 – the Port Harcourt refineries since March and Warri and Kaduna since December – to carry out essential rehabilitation work.

Moreover, even before the shutdown, the refineries operated sub-optimally, at c14% capacity utilisation in 2017-18 and hovering at similar sub-optimal levels over the past few decades.

Nigeria refineries – capacity utilisation at zero since 2019 (%)

In the absence of decent refineries, the government has resorted for many years to importing refined crude to meet the country’s energy needs, despite Nigeria being Africa’s largest crude oil producer, with c1.8mn bpd production (pre-Covid).

Oil and gas imports is largest component of total imports

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