Following talks between Saudi energy officials and Ibe Kachikwu, Nigeria’s minister of state for petroleum resources, there is a plan to draft a memorandum of understanding on an oil and gas partnership that could lead to the construction of a new refinery and investments in liquefied natural gas.
Kachikwu visited Riyadh recently where he met with his counterpart Khalid al-Falih and also held meetings with Amin Nasser, Saudi Aramco CEO.
An early draft of a memorandum of understanding for the two OPEC countries would be ready in the first week of May.
“Areas of interest will cover the existing refinery revamp, building of a brand new refinery, LNG investments and product supply trading in crude and refined products,” Nigeria’s ministry of petroleum resources said in a statement.
The statement added that Khalid Al-Falih, Saudi energy minister, had reiterated the possibility of establishing an independent refinery in Nigeria, considering it the best hub from which to reach other African countries.
But this is not the first time talks about Nigeria-Saudi energy cooperation is being mooted.
As recent as 2016, the issue of energy cooperation between Nigeria and Saudi made headlines at a bilateral meeting in Riyadh when King Salman Bin Abdul-Aziz hosted President Muhammadu Buhari. The mantra resonated in November 2018 when Al-Falih visited Nigeria.
On both occasions, the cooperation did not go beyond media headlines. However, there is a marker this time; Nigeria’s petroleum ministry promised a draft MoU would be ready by first week of May. Beyond that, other timelines were not stated. No figures or volume of investment has been touted.
Saudi Aramco is expanding its downstream operations such as refining and petrochemicals production as part of its drive to become the world’s largest integrated energy firm. Saudi Arabia is on a drive to increase its downstream presence internationally. There is hope that Nigeria would benefit from Saudi Aramco’s recent aggressive oil sector investments.
Aramco recently announced plans to build refineries in India, Pakistan and South Africa.
Indian state-run oil companies and Saudi Aramco are teaming up to build a $44 billion refinery. In Pakistan’s deepwater port of Gwadar, the plan is for a $10 billion oil refinery while in South Africa it is an oil refinery and a petrochemicals plant as part of $10 billion of investments in the country.
Nigeria has been courting Middle Eastern nations to help develop its refining sector, to bolster local fuel supplies and end imports as the West African country is in urgent need of investment to revamp its ailing refining sector. The country’s four refineries, which have a combined capacity of 445,000 b/d, have operated irregularly mainly due to corruption, sabotage on pipelines carrying crude to the plants and technical problems after years of neglect.
Nigeria imports the bulk of its petrol, despite being Africa’s biggest crude oil producer.
FRANK UZUEGBUNAM
