Nigeria to open Africa’s largest oil refinery as it tries to revive a struggling sector
ABUJA, Nigeria — Nigerian President Muhammadu Buhari opened Africa’s largest oil refinery on Monday, hoping to help the energy-rich country become self-sufficient and a net exporter of refined petroleum products.
Built by Aliko Dangote, Africa’s richest man, in Lagos, Nigeria’s economic hub, the $19 billion facility is one of the world’s largest oil refineries, with a capacity of 650,000 barrels per day.
Some analysts have called it a “game changer” for Nigeria’s oil and gas sector, which has struggled for years, while others say its capacity could be limited by oil theft. Most of Nigeria’s state oil refineries are poorly maintained and operating well below capacity, so the West African nation imports refined petroleum products for its own use despite being Africa’s largest oil producer.
The new oil refinery will “allow us not only to meet our country’s demand, but also to become a key player in Africa and the global market,” Dangote said.
According to Dangote, it will start operations before the end of July and will operate alongside a fertilizer plant and a 435 megawatt power plant. At full capacity, at least 40 percent of the oil products produced there could be exported, which would result in significant foreign exchange earnings for Nigeria, he added.
“Our first call is to ramp up production to ensure that we can fully meet our nation’s demand for higher quality products this year to end the tragedy of import dependency and stop dumping in our market once and for all. toxic, substandard gasoline products,” Dangote said.
In addition to creating tens of thousands of jobs, officials believe the refinery could boost fuel supplies in Africa at a time when some of its refineries are operating well below capacity.
Addressing the leaders of several African nations at the opening ceremony, Muhammadu said the project shows the importance of partnering with the private sector “to accelerate the economic growth of the continent”.
Some analysts believe the refinery’s capacity could be limited as Nigeria grapples with massive oil theft that has seen crude production fall to multi-decade lows in recent months, affecting government revenues and limiting its capacity to carry out important projects.
“The Dangote refinery is not a silver bullet for all the problems in Nigeria’s energy sector,” said Olufola Wusu, an oil and gas expert who was part of a team helping to review Nigeria’s gas policy.
But Wusu said it was a great start to revitalizing the sector.
“It solves the creation of domestic capacity for refined products and basically provides an industry different from the one dependent on imports,” he added.
It is not clear what agreement is in place with Nigeria’s major oil companies, but the refinery will also buy oil from outside the country if Nigeria’s limited crude production continues, Wusu added.
Monday’s move is a “defining moment for Nigeria’s energy sector, the region and the international sector,” said Mele Kyari, head of the Nigerian Oil Company.