In a major boost for Nigeria’s oil and gas industry, a group of South Korean investors is planning to build four refineries across different locations in Nigeria.
This was announced by Heineken Lokpobiri, the Minister of State for Petroleum Resources (Oil), during a summit organized by the Crude Oil Refineries Owners Association of Nigeria, held in Lagos.
The announcement comes at a time when Nigeria is striving to become self-sufficient in petroleum refining and reduce its dependency on fuel imports.
Speaking at the summit, Lokpobiri emphasized the Federal Government’s commitment to attracting foreign investments in the refinery sector.
He stated that the government was creating an open and conducive environment for investors to establish refineries in the country.
“We are committed to providing the right environment for investors,” Lokpobiri said.
He highlighted the importance of public-private partnerships as a strategy to drive growth in the midstream and downstream sectors of Nigeria’s oil and gas industry.
According to the Minister, the Federal Government has granted approval to the South Korean consortium to establish the four refineries, although the name of the consortium has not yet been disclosed.
Each of the proposed refineries will have a capacity of 100,000 barrels per day, bringing a much-needed boost to Nigeria’s refining capacity.
The country has struggled for years with insufficient domestic refining capabilities, which has led to a heavy reliance on imported refined petroleum products, even though Nigeria is one of the largest crude oil producers in the world.
“With these refineries, we are taking significant steps toward achieving energy security for the nation,” Lokpobiri said.
The minister explained that the Federal Government’s approach includes equity investment in both modular and larger refineries, aimed at ensuring that Nigeria can refine enough petroleum products to meet local demand.
Modular refineries, which are smaller in scale but quicker to set up compared to traditional large-scale refineries, have been identified as a key part of Nigeria’s strategy to increase refining capacity.
Lokpobiri pointed out that the government is prioritizing these modular refineries by giving special concessions to local refinery owners.
“In addition to attracting foreign investors, we are working with stakeholders to implement the recommendations of the Modular Refinery Committee,” Lokpobiri said.
He added that the government is focused on ensuring local refineries have guaranteed access to crude oil feedstock, which is crucial for their operation.
One of the key aspects of Nigeria’s strategy to improve its oil and gas industry is the full deregulation of the downstream sector.
The downstream sector involves the refining, marketing, and distribution of petroleum products.
Lokpobiri explained that the government is working towards 100 percent deregulation of this sector, which will allow market forces to determine the price of fuel and other petroleum products.
“We will ensure the downstream sector is fully deregulated, and we are putting in place measures to ease the impact on the poor masses,” Lokpobiri said.
Deregulation has been a controversial issue in Nigeria, as it often leads to higher fuel prices. However, experts argue that it is necessary to attract more private investment in refining and distribution.
As part of the efforts to attract investment in the refining sector, Lokpobiri revealed that the Federal Government is working to simplify access to tax exemptions for the importation of refinery equipment.
The government recognizes that building refineries requires significant capital investment, and reducing the tax burden on investors is seen as a way to make the process more attractive.
“To make Nigeria self-sufficient in petroleum refining, we are simplifying access to tax exemptions for investors,” the Minister said.
In addition, Lokpobiri mentioned that the Petroleum Industry Act (PIA) could be amended to allow a portion of the National Gas Infrastructure Fund to be used for supporting refinery-related infrastructure.
This amendment, if passed, would provide much-needed funding for the construction and maintenance of infrastructure needed to support the refining industry.
