China to build $8bn oil refinery in Nigeria

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It has been confirmed that China is to build an $8bn oil refinery in Nigeria.  The Lagos state government made the announcement Tuesday, saying that 80 percent of the money is coming from China and the other 20 percent from the Nigerian National Petroleum Corporation.

refinery

Stratsisincite reported that  China State Construction Engineering Corporation will build the refinery near Lagos, Nigeria’s commercial capital, as agreed in a larger investment deal between the two countries in May.

Assuming that it really does go ahead, this is good news for two reasons. Nigeria is woefully short of reliable energy, and despite its role as a big exporter of crude oil, crooked and ineffectual governments have let the (limited) local refinery capacity run down over the years. If more oil is refined in Nigeria, that should be a boon for consumers (and a few local engineers) even if it punishes the ranks of dubious middlemen who ship oil and petrol in and out of the country, often on the black market. The massive city of Lagos, in particular, has grand plans under the go-getting governor of Lagos State, Babatunde Fashola, to develop better infrastructure, it stated.

It will be the first of three refineries under a deal signed in May between Nigeria’s state oil company, NNPC, and the China State Construction Engineering Corporation (CSCEC).

The refinery will be built in the Lekki free trade zone of Lagos, Nigeria’s biggest city.

Under the $23bn framework agreement signed in May, NNPC and CSEC will also build two other refineries, in Bayelsa and Kogi, as well as a fuel complex.

Nigeria already has four refineries, but they are widely seen to be poorly maintained and only running at 40% of capacity.

As a result, the African country must currently import refined fuel, even though it is a major crude oil producer and exporter.

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