What are the implications of NNPC’s plans to rehabilitate the Port Harcourt refinery? Report

Insight 19 May 2021

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Report summary

On average during 2020, Nigeria consumed 520,000 b/d of refined products, with nearly 80% imported and the remainder coming from non-refinery supply sources. Crude processing at NNPC’s refineries has been poor for many years, and effectively stopped in 2019. As such, Nigeria has been forced to sell crude oil overseas with refined products such as gasoline and middle distillates shipped back under direct sale, direct purchase (DSDP) agreements. NNPC is to remedy this situation by rehabilitating the Port Harcourt facility, and potentially the Warri and Kaduna refineries too. In early April 2021, NNPC signed an EPC contract with Maire Tecnimont SpA, an international engineering and construction firm, to bring Port Harcourt back online in a phased manner. With this extra capacity coming online, will Nigeria become a net exporter of refined products, so potentially shifting global product trade flows?

What does the EPC contract stipulate?
What will be the effect on Nigeria’s supply/demand balance?
Could West and Central Africa absorb surplus Nigerian barrels?
How would Nigeria’s status as a net exporter upset global balances and refining margins?

Tables and charts

This report includes 3 images and tables including:

Table 1: Estimated product yield (% volume) and output at 90% utilisation after completion of all phases.
Figure 1: Nigeria’s all supply balance with Dangote and Port Harcourt running
Figure 2: West & Central Africa’s all supply balance with Dangote and Port Harcourt running