Nigerian Oil Industry Shifts from Capacity to Supply Constraint

Nigeria's oil industry is undergoing a significant shift as it transitions from a capacity constraint to a supply constraint. With the country's biggest challenge no longer being refining capacity, but rather producing enough crude oil to meet demand.

The Dangote Petroleum Refinery, Nigeria's largest single-train refinery, operates at an estimated 85% capacity and requires approximately 552,500 barrels of crude oil per day, which accounts for around 35% of the country's total daily production. However, in June, Nigeria produced only 1.56 million barrels per day.

This leaves a remaining 1.01 million barrels per day for smaller domestic refineries, export commitments, and crude-backed financing deals. The situation is precarious as it leaves little room for unexpected disruptions such as pipeline failures or production outages in the Niger Delta.