Seven New Modular Refineries to Boost Nigeria’s Capacity

The proposed facilities are expected to add 83,000 barrels per day to domestic refining capacity in 2027 as the Dangote refinery reshapes regional fuel trade

Nigeria’s modular refining sector is projected to record a significant expansion in 2027, with seven new facilities expected to begin operations and add a combined capacity of 83,000 barrels per day to the country’s domestic refining industry.

Also read: EU Moves to Release 42.6m Barrels of Oil Following G7 Commitment

The projection was disclosed by Argus Media analyst George Maher-Bonnett during a presentation at the OTL Africa Downstream conference in Lagos on Wednesday, where he examined developments in Nigeria’s petroleum products market and the wider African energy sector.

In his presentation, titled African Energy Outlook, Maher-Bonnett said four modular refineries were operating in Nigeria in September, with a combined installed capacity of 32,000 barrels per day.

“Four modular refineries operating in September, total 32,000 b/d capacity,” he said.

He added that seven additional modular facilities were expected to commence operations next year, with a combined capacity of 83,000 barrels per day.

The proposed additions would represent more than two and a half times the combined capacity of the four modular refineries operating in September, potentially strengthening the contribution of smaller refining facilities to Nigeria’s domestic petroleum supply.

However, the presentation did not disclose the names, ownership structures or locations of the seven proposed facilities. It also did not provide individual capacity figures or specific commissioning dates.

The anticipated expansion comes as Nigeria’s downstream petroleum industry undergoes significant changes following increased domestic refining activity, particularly the growing contribution of the Dangote Petroleum Refinery.

Maher-Bonnett identified the 700,000-barrel-per-day Dangote facility in Lekki as a major factor improving Nigeria’s self-sufficiency in refined petroleum products.

“Dangote’s 700,000 bpd Lekki refinery is running hard, gasoline output is steady,” the presentation stated.

According to the analyst, the refinery’s increasing output is also changing the economics of petroleum product imports into West Africa, reducing the attractiveness of shipping some products from Europe to the region.

The presentation further noted that Nigeria’s fuel demand had declined during the year, attributing the development largely to higher pump prices.

“Nigerian fuels demand is down this year,” the report stated, citing “higher flat prices” as a contributing factor.

It also observed that self-sufficiency was improving as the Dangote refinery increased production, with modular facilities expected to play a greater role in the country’s refining landscape.

On government intervention in the downstream market, the presentation identified an NNPC price reduction during the month as the only intervention recorded within the period under review.

Beyond Nigeria, Maher-Bonnett highlighted developments in Ghana’s refining industry, particularly the gradual increase in production at the 45,000-barrel-per-day Tema refinery.

The facility’s improving output was identified as another factor supporting Ghana’s efforts to reduce dependence on imported petroleum products.

The analyst also pointed to weakening economics in the movement of refined petroleum products from Europe to West Africa and from Europe to the United States.

Higher freight costs were identified as an additional factor affecting the competitiveness of these trading routes.

For Nigeria, the projected addition of 83,000 barrels per day from seven modular refineries could further diversify domestic refining capacity and reduce reliance on imported products, provided the facilities meet their commissioning targets and operate sustainably.

Also read: Climate Resilience Remains a Global Priority

The outlook, however, will depend on the timely completion of the proposed projects, access to crude oil, financing, infrastructure and the ability of operators to compete in an increasingly changing domestic and regional market.