New Refinery to Boost Nigeria’s Oil Processing Capacity

The Federal Government, through the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), has granted approval for the construction of a new refinery in Delta State. This licence, awarded to MRO Energy Limited, will allow the establishment of a 10,000 barrels per stream day (BPSD) refinery at Imode, located in Ughelli, Delta State.

This move aligns with the government’s push to expand Nigeria’s domestic refining capacity and reduce reliance on imported petroleum products.

Details of the Approval

The NMDPRA confirmed the approval in a statement posted on its official X (formerly Twitter) handle on Tuesday. According to the statement, the Authority Chief Executive, Farouk Ahmed, presented the license to MRO Energy Limited, marking another step toward strengthening the nation’s refining capabilities.

The NMDPRA stated, “The authority Chief Executive, Farouk Ahmed, presented a Licence To Establish a 10,000 Barrels Per Stream Day Refinery at Imode In Ughelli, Delta State, to MRO Energy Limited.”

Recent Developments in Nigeria’s Refining Sector

This latest approval is part of a series of ongoing efforts to revitalize Nigeria’s refining infrastructure. Just two months earlier, the NMDPRA granted a licence to Process Design and Development Limited for the construction of a 27,000 BPSD refinery in Dole-Wure, Akko area of Gombe State.

Additionally, earlier this month, the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) announced plans to collaborate with its partners to build a refinery with an initial capacity of 50,000 barrels per day.

Nigeria’s Refining Landscape: Current Status and Challenges

Despite these approvals and developments, most of Nigeria’s existing refineries remain moribund, operating far below capacity or completely non-functional. Presently, the nation has about 11 modular and conventional refineries, yet the majority fail to meet the required standards for efficient operations.

The inefficiency of local refineries has been a long-standing issue, forcing Nigeria to import a significant proportion of its petroleum products. This dependency has led to high operational costs, domestic fuel scarcity, and periodic hikes in pump prices.

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) recently set a production target of 770,500 barrels per day for domestic refineries, a benchmark that remains challenging given the current state of the sector.

Modular Refineries: A Solution to Nigeria’s Refining Deficit?

The construction of modular refineries, such as the one planned by MRO Energy Limited, is seen as a viable solution to augment the nation’s refining capacity. These smaller-scale facilities are faster and less expensive to build than traditional refineries and can be tailored to meet local energy demands.

However, for modular refineries to deliver on their promise, there must be significant investment in infrastructure, a stable regulatory framework, and strategic partnerships between the public and private sectors.

Government’s Role in Supporting Refinery Development

The Federal Government’s approval of these new refineries highlights its commitment to addressing the persistent challenges in Nigeria’s energy sector. By granting licences and encouraging private sector participation, the government aims to achieve the following objectives:

1. Increase Domestic Refining Capacity: Reduce dependency on imported petroleum products and ensure a steady supply of refined products for domestic consumption.
2. Economic Growth: Create jobs and stimulate local economies through refinery construction and operations.
3. Energy Security: Strengthen Nigeria’s energy infrastructure to support industrial growth and export potential.
4. Price Stabilization: Lower the cost of petroleum products by improving local supply and reducing import-related expenses.

Outlook for Nigeria’s Refining Industry

While the approvals for new refineries represent a positive step forward, the success of these projects will depend on several factors, including:

• Timely Implementation: Ensuring that construction progresses on schedule to bring refineries online as planned.
• Adequate Funding: Securing financial backing from both government and private investors.
• Regulatory Oversight: Maintaining transparency and enforcing compliance with industry standards to prevent inefficiencies.
• Infrastructure Development: Addressing logistics and distribution challenges to support refinery operations.

Conclusion

The construction of a 10,000 BPSD refinery by MRO Energy Limited in Ughelli, Delta State, marks another milestone in Nigeria’s journey toward achieving self-sufficiency in petroleum refining. Coupled with other initiatives across the country, these efforts could significantly transform Nigeria’s energy landscape, fostering economic growth and energy security.

However, to fully realize these benefits, the government and private sector must work together to address the systemic challenges that have historically plagued the refining industry.