Nigeria signs $23-billion refinery deal with China

Nigeria has signed a $23-billion memorandum of understanding  with China to construct three oil refineries and a fuel complex in the oil-rich African state to stem the flood of imported refined products into the country.

The Nigerian National Petroleum Corporation (NNPC) and China State Construction Engineering Corporation executed the memorandum of understanding on Saturday to jointly seek an estimated $23-billion in financing from the China Export & Credit Insurance Corporation and a consortium of Chinese banks, for constructing three oil refineries and a fuel complex that is expected to add 750,000 barrels a day to Nigeria's refining capability.

The three refineries would be constructed in Lagos, Kebbi state in north-western Nigeria  in and Bayelsa southern Nigeria, while the location of the fuel complex has yet not been decided.

Despite Nigeria being the world's 12th-largest oil producer, it imports roughly 85 per cent of refined products because of mismanagement of its four state-owned refineries, costing the country $10 billion annually in import costs.

On completion, the three refineries will add some 750,000 barrels per day capacity to Nigeria's refining infrastructure and position NNPC to engage profitably in the international trading of refined petroleum products, said NNPC in a statement.

So far, the Nigeria government pleas to build and operate refineries in the country have been rejected by Western oil majors citing poor financial returns.