Nigeria Oil and Gas Downstream Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Nigeria Oil and Gas Downstream Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The Nigeria Oil & Gas Downstream Market is expected to grow with a CAGR of around 1.2% during the forecast period. The downstream sector was significantly hit by the Covid-19 pandemic due to crashed demand for gasoline and other fuels. Gasoline has the highest volume in the fractionation products demand, as it is widely used in transportation which almost got blocked during the lockdown. The oil & gas downstream sector of the country can get accelerated in the coming years, mainly due to two factors. First, the government’s keen desire to have a well-established domestic refining industry, as Nigeria currently imports almost all of its petroleum products due to the maintenance issues of major refineries. Secondly, the upcoming refinery capacity expansion projects can steer the growth. However, the downstream sector growth can be hampered by higher prices of crude oil in the future due to the Covid-19 pandemic recovery. This will add up to their input cost.

Key Highlights

• The Refining Segment is expected to have the highest share during the forecast perioddue to the high demand for fuels in the country for various household and businesses energy requirements.
• The prevalent concept of modular refineries in the country can prove to be a great opportunity to address the unexpected product demand shifts, as they include quick installation. Furthermore, Nigeria’s huge oil reserves assure a sustainable availability of crude oil for the refining input.
• The growing interest of private companies to invest in the downstream sector of the country is likely to bolster market growth.

Key Market TrendsRefining Segment Expected to Dominate the Market

• The refining segment is likely to dominate the market during the forecast period as Nigeria’sindigenous refining industry currently needs a vast expansion to meet the fast-growingdemand for petroleum products.
• The refining capacity of the country was around 461,000 barrels per day (b/d) in 2020, which is highly insufficient to meet the current demand. According to Nigerian National Petroleum Corporation (NNPC), the demand for petroleum products in Nigeria is expected to grow by 14.6% by 2025, from 15.1 million metric tonnes in 2020 to 17.3 million metric tonnes in 2025. Thus, new refining projects are lined up to fill these loopholes in the demand-supply scenario and to reduce the imports.
• In November 2020, the government held the ground-breaking event for the start of the construction of the second phase of the Waltersmith modular refinery to expand the capacity to 50,000b/d. The refinery is located in the Imo state of Nigeria, with one refining section of 5000b/d already in operation. The Nigerian Content Development Monitoring Board (NCDMB) is also expected to invest in this next phase of the capacity addition.
• In November 2021, the Dangote group announced that they are likely to commission the Dangote refinery in 2022. The 650,000 b/d refinery is located in Lagos, Nigeria, and is believed to be Africa’s largest upcoming integrated refinery and the world’s biggest single train facility.
• Owing to the above points, the refining segment is likely to have a highlighted growth during the forecast period.

Investments by Private Sector to Drive the Downstream Market

• The Nigerian oil and gas downstream sector is expected to get accelerated by investments by independent energy companies, due to the government’s recent plans to have a majority shareholding of private companies even in state-owned refineries in the coming years. They hinted at attracting investments by private companies.
• The country’s refining sector has witnessed an extreme degradation in the recent picture due to the productivity issues caused by ailing infrastructure. The four public-sector refineries can process 445,000 barrels of crude oil collectively everyday, but they were running at around 7% combined average utilization rate in 2019. These issues demanded new investments to cure the ailing refining sector. There are about 23 valid licences pending for approval of new refinery proposals, as of 2021.
• In April 2021, Brass Fertilizer & Petrochemical Company announced to construct a new ammonia and methanol production plant in Nigeria, a project with a capacity of 1.70 million tonnes per annum (mtpa). The new build plant has already received approval and is expected to start operations by 2025.
• In July 2021, Niger Delta Exploration & Production Plc (NDEP), an independent integrated energy company, announced that they are expected to start a new 11,000 b/d refinery in Nigeria, which is currently under construction. The company also got approval for the addition of Train3 of the already existent Ogbele refinery.
• Owing to such an interest from the private companies, the Nigeria oil and gas downstream market growth is likely to have a positive impact in the near future.

Competitive Landscape

The Nigerian oil and gas downstream market is consolidated. Some of the major players operating in this market include Nigerian National Petroleum Corporation (NNPC), KBR Inc., NDEP PLC, Indorama Eleme Petrochemicals Limited, and Midoil Refining & Petrochemicals Company Limited.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

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