A brighter macroeconomic future awaits Nigeria in the corridors of the petroleum sector as 2025 is finally here with us, to the glory of the Almighty. This news comes as an encouraging development in the nation’s hydrocarbon industry regarding the long expected local refining operations of Nigerian crude that is coming like a mountain dew from the downstream petroleum subsector of the nation’s oil and gas industry. This is with reference to the government owned refineries (the old Port Harcourt Refinery of 60,000 barrels per day capacity, established in 1965; and the Warri Petrochemicals Refinery of 125,000 barrels per day capacity, established in 1978) that have been moribund for decades, but are currently bouncing back to productive streaming operations after rehabilitation. The obvious outcome within the macroeconomic space, of course, is a great relief from the unbearable pressure that consistently mounts on foreign exchange savings, and a tremendous ease-off on the long overburdened local currency resulting from daily foreign exchange demands for importations of refined products, to power and run the economy.
In 2025, industry watchers and concerned stakeholders are particularly excited with the anticipated positive impact the local refining of crude oil would have on the nation’s economy towards the end of the third quarter, if the good tidings being presently released from the oil sector is not politically strangulated by economic saboteurs because, expectations and projections for the economy in 2025 are quite high. Nigeria has tarried for too long a period with wastage of precious time and the loss of great economic opportunities that ought to have since placed the nation at her rightful place amongst the comity of nations. The oil sector alone (historically) has always been the “cash cow” of the economy, and “the goose that lays the golden eggs” from its foreign exchange earnings and the general proceeds of oil and gas exports to our trading partners across the globe. The attraction of the entire activity is the new-focus on adding value (locally) to our “black gold” through the operations of the local refineries which, in due course, will include about 25 privately owned modular refineries. The envisaged operations will not only usher in self sufficiency in the energy sector but shall significantly change the tide of financial standing of the economy.
Savings surplus is possible once the value proposition is improved upon, even in a distressed economy like Nigeria’s because, apart from the great potentials that abound in the oil industry and the capital stock of the mineral resources in the industry, growth drivers that shall turn the table, if caution and patriotism are entrenched in the course of discharging the national assignments conscientiously, will definitely have direct impact on the economic performance of the entire nation. The oil and gas industry in the country has been in existence and long been tested. Therefore, local refining at this point in our national life, even with just Dangote Refinery (650,000 barrels daily capacity), Warri Petrochemical Refinery, with a section producing Kerosene, Diesel, LPG, Heavy Naphtha (125,000 barrels daily nameplate capacity) and the old Port Harcourt (60,000 barrels per day) totaling 835,000 barrels of crude (the basic raw material), if prudently managed, patriotically executed and professionally operated, their cumulative sums of PMS/petrol yields (among others) shall not be anything below 54.44 million litres per day. This is besides the fact that the Eleme Refinery in Port Harcourt, of 150,000 barrels per day, which is about 90 percent, shall soon come on stream. As it stands presently, if the three refineries operate at full capacity, and the estimated daily domestic demand/local consumption is verified for an actual figure, believed to be around 40 million liters every day, no doubt, the excess refined products will be exported to neighbouring countries for foreign exchange earnings, and thus reposition the country as a “self sufficient economy” on refined products.
With the latest development in the downstream oil sector, it means that the import substitution policy shall eliminate future refined products imports with these locally sourced replacements. At the same time, backward integration policy will significantly manifest in economic activities within the downstream operations, with very minimal external involvements. Economic activities in the petroleum sector shall experience a visible paradigm shift in financial flow with significant surplus savings on foreign exchange that otherwise should have been spent on petroleum imports; bearing in mind that national economic efficiency is expressed as the sum of Consumer Expenditure, Government Expenditure and Investment, minus imports. This mathematical expression has for long been significantly influenced in Nigeria by imports of refined products and the foreign exchange earnings from sales of crude oil (or swapping of our black gold). Among all the sectors of the economy, the petroleum sector is singled out in this illustration because others do not presently influence the economy significantly as the petroleum sector does. This is the basis for crude oil projected production target that is expected to hit 3 million barrels per day this year to enable the economy to be effectively, positively and speedily impacted, in growth and macroeconomic prosperity.
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