Nigeria’s projected development in refining capability over the early 2020s will ‘substantiallyerode the country’s crude oil exports due to a ‘weaknew project pipeline, in response to a brand new report from BMI Research.
While the report hailed the projected start up of the 650,000 barrel per day (bpd) Dangote refinery by 2020 and the potential of a second 250,000 bpd facility start up by 2021, oil and gas analysts at BMI highlighted that Nigeria may struggle to increase its oil production to meet new demand from these facilities, as well as maintain exports, as different international locations have executed.
“Saudi Arabia has successfully managed this challenge, including new capacity in 2013 and 2015, yet maintaining robust levels of exports,the report acknowledged.
Nigeria however, has a ‘bleakoutlook, in response to the report.
“The low oil worth and uncertainty round the security, fiscal and regulatory setting has resulted in insufficient…investment decisions to ship lengthy-term progress,the report stated.
“As a results of the limited venture pipeline and the growth in domestic crude demand from refineries, both crude oil exports will fall, or refineries will run at decrease utilization charges,the report added.
BMI analysts said there was even a possibility that both scenarios may happen, with crude oil exports dropping as extra domestic crude is processed at new refineries, and new refineries operating at low utilization rates given ‘crude oil export commitments and inconsistent supply
“That said, this will even create opportunities. If the Nigerian authorities is finally capable of push by the various components of the Petroleum Industry Invoice (PIB), supporting investor confidence in future regulatory and fiscal situations, there will be an existing domestic demand marketplace for the oil,the report acknowledged.
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