Nigeria Oil & Gas Downstream Market - Growth, Trends, Covid-19 Impact, And Forecasts (2021 - 2026)

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The COVID-19 pandemic has affected the market severely as the demand for refined petroleum products in the country decreased due to lockdown restrictions. Moreover, refinery and petrochemical projects also got delayed during Q1 and Q2 2020 owing to supply chain disruptions and travel restrictions across the globe. However, an anticipated recovery in the refined petroleum products demand and the government's plan to make the country a regional hub for refined petroleum products is expected to drive the market during the forecast period. However, the high volatility in crude oil prices is expected to restrain the growth of the market in the coming years.

The upcoming refinery projects are expected to drive the demand in the market during the forecast period.

The concept of small and modular refineries is gaining popularity in the country. This, in turn, is expected to create significant opportunities for the market players in the near future.

Improving the existing downstream infrastructure and encouraging private sector investment for the refineries and petrochemical plants is expected to drive the ...
... studied market during the forecast period.
Key Market Trends

Refinery Segment to Dominate the Market

Nigeria is the second biggest oil-rich country in Africa, after Libya. The country is estimated to hold 37 billion barrels of proven oil reserves. However, despite its rich resources, at present Nigeria's state-dominated oil industry is declining, afflicted by systemic corruption, starved for international investment, and hit hard by weak oil prices. Despite that malaise, oil remains the country's chief source of income.

In 2019, the refineries around the Niger Delta region are at present producing around the 350,000 barrel per day capacity, with this figure increasing by 1.7% from 344,000 barrels per day. However, the throughput in the country has decreased severely to 7 thousand barrels a day, in 2019, which is a cause of concern for years to come.

Thus, the government is actively looking to upgrade the existing refineries in the country. For instance, in November 2019, Nigeria's government pledged to support Nigerian conglomerate Dangote Industries unit Dangote Oil Refining's 650,000-b/d grassroots integrated refining and petrochemical complex now under construction in southwestern Nigeria's Lekki Free Trade Zone.

Therefore, with the government support and increasing upgradation activities, the refinery segment is expecetd to drive the studied marke

Improving the Infrastructure and Encouraging Private Sector Investment to Drive the Market

Nigeria is one of the largest crude oil producers in the world with an average daily output of about 2 million barrels per day. However, most of the fuel has to be refined outside the country. Therefore, the government is trying to reduce its dependence on refined oil while creating an oil export-led economy, especially in the Africa region, by the reforming and investing in the sector

The downstream sector is currently bogged down with numerous challenges, such as inappropriate product pricing, bridging product supply, insecurity, irregular gas supply, pipeline vandalism, inadequate pipeline infrastructure, non-functional/under-functioning refineries, etc.

Therefore, in February 2021, the Nigeria state oil company announced the privatization of the downstream industry which would help the group repair and build more pipelines across the country. This is expected to be covered under Nigeria's long-awaited oil reform bill would privatize the Nigerian National Petroleum Company (NNPC). This is expected to aid the growth of downstream infrastructure in the coming years.

Moreover, the government is building new refinery infrastructure. For instance, in December 2019, the KBR group announced that it has been awarded the Project Management Consultancy Services contract by Nigerian National Petroleum Corporation (NNPC). Under the contract, KBR, as co-consultant with the National Engineering and Technical Company Ltd (NETCO) will provide technical consultancy services for four greenfield refineries in the ANOH and Western Forcados area.

Thus, the increasing privatization and new greenfield project are expected to drive the market during the studied period.
Competitive Landscape

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

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