'One produces 20,000bpd' - OPEC says new refineries coming up in Nigeria to rival Dangote, lift sales

The Organisation of Petroleum Exporting Countries (OPEC) has revealed that Nigeria is about to witness the establishment of small modular refineries with 20,000 bpd capacity in the medium term.

The group revealed this in its World Oil Outlook, launched in Saudi Arabia.

The Outlook says Africa will see a medium-term distillation capacity of 1.2 million barrels daily.

A significant increase is due to the upcoming 650,000-capacity Dangote Refinery, which is projected to boost Nigeria's capacity.

The refinery was officially opened in May 2022 by ex-President Muhammadu Buhari and is slated to begin production in October with the initial plan of refining diesel and aviation fuel and later petrol in November.

The report said: "Moreover, Nigeria is set to witness several small modular refineries established in the medium term, with capacities of up to 20 thousand barrels per day (tb/d) each."

Nairametrics reports that despite the optimistic projection of the report, Nigeria faces funding setbacks for modular refineries and rising incidents of pipeline vandalism and crude oil theft.

Analysts say the Dangote refinery will cause a significant shift in pricing

Policy energy analyst and Team Lead, Platforms Africa, Adeola Yusuf, revealed in an interview with Legit.ng that the coming onstream of Dangote Refinery will not make it any better for Nigeria to earn more Forex from crude oil.

"The refinery is privately owned and would seek to maximize profits. Also, it is sited on a Free Trade Zone, meaning Nigerian laws do not bind it and may probably sell refined products to Nigeria in dollars," Yusuf stated.

But in a response to whether the Dangote Refinery will sell products to Nigeria in foreign currency, the company's management said it would sell to Nigeria in the local currency.