Oil consumption to rise to 400 000 bpd by 2023 — BMI

BUSINESS Monitor International has said the prices of oil consumption in Nigeria is expected to increase from 311 000 bpd last year to 400 000 bpd by the end of 2023. Business Monitor International risk analysis and forecasts, market research on leading industries, and multinational company research is relied upon by corporate bodies, banks, government departments and multilateral organisations in over 125 countries around the world.

According to the report, the increase is credited to improvement in the transport sector and the continued use of diesel power generators as backup methods to the country’s intermittent power supplies.

BMI forecast that the recent collapse in oil prices will reinforce the likelihood of fuel subsidy reductions in the country, adding that the low fuel prices should in theory enable subsidy reductions without an increase in regulated fuel price.

It noted that looking at the downstream sector, the country does indeed have a large refining capacity, however the adverse consequences of fuel subsidies, poor maintenance and general operational failure has resulted in the sector’s utilisation rates remaining below 30% over the last 10 years.

Also, it stated that refined fuels production could increase from 2015 onwards however with the Escravos GTL plant starting operations, and the important 500 00 bpd Dangote refinery which is expected to come online by 2020.

On gas, the report further stated that with the prospect for higher domestic gas prices and the promising domestic demand from the power sector, there should be some stimulation in private investment in infrastructure to increase gas production levels. “This at the moment is turning into a slow ramp up in gas monetisation and production. The expansion of LNG capacity in the country is unlikely given the unreliable supply side and an uncertain demand side.

“However, more gas production in the country is most likely going to be consumed domestically. “New LNG projects are coming online all over the world however and therefore Nigerian LNG export capacity is expected to remain capped by 30 billion m3 and will see Nigeria lose market share in the global LNG sector,” it maintained.

Specifically, the report stated that growth in gas production is going to spur downstream petrochemicals industries, however the company has warned that the business environment remains uncertain and will no doubt be affected by the turbulence that inevitably comes with presidential elections.

According to it: “Last year, the country had an olefins production capacity of 550 000 bpy, ethylene at 125 000 tpy and thermoplastic resins at 240 000 tpy along with others. The sector is characterised by low capacity utilisation, frequently disrupted plan operations and a lack of proper resources to operate and maintain facilities.

“The government is continuing to make efforts to attract Foreign Direct Investment, FID, into the country’s petrochemical sector, however, a lack of skilled labour as well as political and social unrest and sabotage of infrastructure is expected to delay projects.” It maintained that if current planned projects do run as planned, by 2019 Nigeria could have an additional 5.6 million tpy of urea and 1.74 million tpy of ammonia.