Nigeria to propel refining capacity growth in the Middle East and Africa to 2022

Nigeria will be the growth engine of the refining industry in the Middle East and Africa between 2018 and 2022, as the country is set to add the most planned refining capacity among all countries in the two regions during the forecast period, according to GlobalData.

In its Refining industry outlook in Middle East and Africa to 2022 report, the data and analytics company states that in 2018, the Middle East and Africa will account for 42.6% of total global refining capacity. The total refining capacity in the region is expected to increase from 15.5mn b/d in 2018 to 21.7mn b/d in 2022. The region is also expected to have an estimated newbuild capital expenditure (capex) spending of $215.3bn, of which roughly 25% will be spent by Nigeria during the outlook period.

Nigeria will lead in terms of refining capacity additions and newbuild capex spending by 2022. The country has planned investment of around $54.8bn for refining capacity additions of 1.9mn b/d by 2022. Its oil refining capacity is expected to increase from 4.46mn b/d in 2017 to 2.57mn b/d in 2022, at an average annual growth rate (AAGR) of 35%.

Soorya Tejomoortula, Oil & Gas Analyst, explains: ‘Nigeria is increasing its crude oil refining capacity as it aims to become a net exporter of petroleum products, instead of being a mere net exporter of crude oil. The increase in refining capacity will also help the country to meet growing domestic consumption of petroleum products.’

GlobalData identifies Iran as the second highest contributor in the Middle East and Africa in terms of refining capacity additions. The country will add around 1.2mn b/d of refining capacity by 2022, which will increase the country’s total refining capacity to 3.55mn b/d. A planned investment of $15.9bn is expected to be spent on the newbuild projects, during the outlook period.

Tejomoortula adds: ‘Iran is planning to increase its crude oil refining capacity as it focuses on meeting growing domestic fuel demand and reducing imports. The country is also aiming to become a significant exporter of petroleum products.’

Iraq is the third highest contributor to the refinery capacity growth in the Middle East and Africa. The country’s refining capacity will increase by 780,000 b/d, from 1.3mn b/d in 2018 to 2.07 mn b/d in 2022. Iran is the second highest capex spender in the Middle East and Africa with estimated capex spending of $37.9bn for refining capacity additions.

Among the upcoming refineries in the region, Lagos I in Nigeria is forecast to have the highest refining capacity of 650,000 b/d in 2022. Al-Zour in Kuwait and Siraf in Iran follow, with capacities of 615,000 b/d and 480,000 b/d respectively.

In terms of capex, Yanbu IV in Saudi Arabia leads with capex of $15bn during the period 2018 to 2022, followed by Tabi in Angola and Mthombo in South Africa with capex of $10.5bn and $10bn, respectively.

Refining capacity by key countries in the Middle East and Africa, in mn b/d, 2018–2022
Source: GlobalData, Oil & Gas Intelligence Centre