Nigeria nearing refining and energy independence

Author: Iloka Benneth Chiemelie

Published: 19-October-2014

Thanks so much for your comments.

However, I think your comments are based on events that occurred in a number of years back. For instance, Nigeria doesn't export majority of its oil to the US and in reality US has bene dropping its importation from Nigeria, which is now just at 5.7 million barrel as of the first quarter of 2014, a significant low when compared with the 30.7 million barrel it imported in 2013 (Femi, 2014). US is pushing towards energy independence and one of the ways it is doing so is by reducing its overall importation of oil.

Secondary, Nigeria does import some of its crude energy because the local refineries doesn’t have enough capacity to cover for local and international demands. However, numerous investments have recently been pumped into this section such as the $9 billion investment by Aliko Dngote, Africa’s richest man to build a new refinery with 400,000 bpd as its initial refining capability (Business day, 2014a). The completion of the refinery will cut Nigeria’s dependence on oversea refining by 50% (Business day, 2014b). Other Nigerian investors have also showed interest in the refining business as Nigeria seeks to become refinery independent. Thus, in the long-run, Nigeria is expected to refine all of its crudes locally and this will further solidify its energy independence as Africa’s largest economy.

In terms of the energy access, all Nigerian have access to fossil fuel which can be basically bought across all corners of the country. For electricity, Nigeria actually produces more than it consumes. For instance in 2010, the country consumed 20.38 billion kWh while it produced 24.87 billion kWh in the same year (IndexM, 2014). The only issue is distribution and Nigerian government is working towards enhancing over distribution by privatizing majority of the electricity sector and between 2013 to 2014, the country experienced additional 4, 0000 Mw rise in power generation (Premium times, 2014).  

Thus, in terms of future energy sustainability, if all factors (abundance of crude resources in Nigeria, increased electricity generation, huge investments in new refineries, improved government policies, and privatization) are considered (ceteris paribus), one can easily visualize Nigeria’s energy dependence in the future as opposed to the compared country (China) in this case. This is because China doesn’t have abundant fossil resources like Nigeria and this will force the country to be significantly dependent on imported energy.

References

Business day (2014a). Towards a private oil refinery market in Nigeria. Available at: http://businessdayonline.com/2014/07/towards-a-private-oil-refinery-market-in-nigeria/#.VEOihPmUdWU [Accessed on: 19-10-2014].

Business day (2014b). Dangote refinery set to come on stream as license is near ready. Available at: http://businessdayonline.com/2014/06/dangote-refinery-set-to-come-on-stream-as-licence-is-near-ready/#.VEOkUvmUdWU [Accessed on: 19-10-2014].

Femi, A (2014). Drop in US oil import from Nigeria valued at $2.7bn in Q1. Available at: http://businessdayonline.com/2014/06/drop-in-us-oil-import-from-nigeria-valued-at-2-7bn-in-q1/#.VEOgufmUdWU [Accessed on: 19-10-2014].

Index Mundi (2014). Nigeria Electricity – production. Available at: http://www.indexmundi.com/nigeria/electricity_production.html [Accessed on: 19-10-2014].

Premium times (2014). Nigerian power generation rises above 4,000mw. Available at: https://www.premiumtimesng.com/news/129989-nigerian-power-generation-rises-above-4000mw.html [Accessed on: 19-10-2014].