- Finance - Oil
Nigeria gets help from China to refine its own oil
Nigeria has moved to improve its oil production and refining as China prepares to build an $8bn oil refinery in the country that would add 750,000 barrels per day of extra refining capacity, reports have claimed.
Nigeria already has four refineries, but due to poor maintenance the refineries are reported to be running at 40% of their capacity. As a result, the West African country must currently import refined fuel, even though it is a major crude oil producer and exporter.
However, the $23bn deal signed between Nigeria’s state oil company, NNPC, and the China State Construction Engineering Corporation (CSCEC) in May is expected to provide three new refineries.
The first refinery will be built in the Lekki free trade zone of Lagos, Nigeria’s biggest city. According to reporters, the Chinese will cover 80% of the cost, and NNPC 20%, while the state of Lagos will provide land and infrastructure.
NNPC and CSCEC jointly sought financing and credits from Chinese authorities and banks to build three refineries.
Nigeria imports roughly 85% of its fuel needs because of the disrepair and mismanagement of its four state-owned refineries. Conversely, the government under President Goodluck Jonathan had said that foreign companies must invest in developing Nigeria’s infrastructure and economy first, before they can benefit from its oil and gas exports.
NNPC hopes the construction of new refineries will curb the flood of imported refined products into Nigeria. According to reports, two other refineries will be built in Bayelsa and Kogi, as well as a fuel complex.