Nigeria bitumen demand

Home » Nigeria bitumen demand

Nigeria bitumen outlook

Every so often, successive Nigerian governments revisit a structural failing that leads to the oil-rich country importing large volumes of oil products, from gasoline to bitumen, at enormous cost in foreign exchange: it’s refineries simply don’t operate properly.

NNPC’s group managing director Mele Kyari said in April that the Nigerian state-owned firm would shut down its three moribund refineries – Port Harcourt, Warri and Kaduna – and get them back on stream again “after proper scoping, which was not done in the past”. He said NNPC had secured financing to make sure the refineries – with 445,000 b/d of combined capacity – would work “optimally”, echoing similar pledges in the past.  The refineries – with Kaduna the only one capable of producing bitumen – have been running at minimal rates for years, punctuated by lengthy shutdowns. 

Volume of requiremnet


On argus website, NNPC puts “asphalt” (bitumen) production capacity at its 110,000 b/d Kaduna refinery at 1,796 t/day. That’s equivalent to 655,000 t/yr, or around 600,000 t/yr based on normal patterns of annual maintenance work. But the refinery has rarely been known to have produced anything other than negligible bitumen volumes, even when it’s been running. It hasn’t been operational for more than a year, leaving the country to continue importing all its bitumen needs. Domestic consumption peaked at around 500,000t in 2013 before a recession prompted a precipitous drop to 110,000t in 2015. Since then, demand has grown to reach 300,000t last year amidst an active programme of road and other infrastructure investment by President Muhammadu Buhari’s administration.   


Natural bitumen in Nigeria getting availble


If those requirements can’t be met by local refinery production, Nigeria’s alternative is natural bitumen and tar sands, spanning around 120km spread across Nigeria’s Ondo, Ogun, Edo and Lagos states.  The county’s deposits of bitumen, tar sands and heavy oils rank amongst the biggest in the world. The Ministry of Mines and Steel Development estimates that in the southwest Nigerian state of Ondo alone, estimated probably reserves of natural bitumen stand at 16bn barrels, and that of tar sands and heavy oils at 42bn barrels. That compares with 34bn bl of Nigeria’s proven crude oil reserves.

Plans to exploit those reserves are most advanced in Ondo state, where state-backed company exploration and processing company Southwest Bitumen Limited has completed a manufacturing facility that aims to produce 20,000 t/month of bitumen. Ondo state Governor Rotimi Akeredolu  launched a policy to develop its rich reserves of natural bitumen in 2017 with the aim of cutting Nigeria’s refined bitumen import bill he estimated at the time to be running at 300bn Naira ($835mn) per year. 

In a tweet last week, on 29 July, Akeredolu pledged to take this policy forward, adding that “sustainable development takes time”. 
Buhari gave his backing to the bitumen exploration project in a November 2017 budget speech, and the country’s Minister of Works and Housing, Babatunde Fashola, announced late last month that Nigeria’s Federal Executive Council had approved a directive to the Ministry of Petroleum Resources and the Ministry of Mines and Steel Development to “enhance, stimulate and encourage local bitumen production in Nigeria”. 

Nigerians will look on all these efforts and pronouncements to enhance Nigeria’s refined and natural bitumen production capability with a mixture of scepticism and hope. But for the time being at least, construction companies and local suppliers will stick to importing cargoes of the road paving product, just as Nigerian motorists rely on imported gasoline, in both cases at a huge cost to the nation. 

Hello how can i help you?