Let us dive into history: Before the discovery of crude oil popularly known as the black gold, Nigeria’s economy comprehensively was thriving more on agricultural production largely from cash crops: namely cocoa and coffee from the western part of Nigeria, groundnut as well as hides and skins mainly from northern Nigeria. Oil palm chiefly from the Eastern parts of the country, while the Southern parts were famous for cultivating rubber. Agriculture was the mainstay and source of her foreign exchange through the exportation of these cash crops.
The discovery of crude oil in Nigeria came with it some form of mixed blessing. The discovery of crude oil did come with economic growth and infrastructural development with a wide range of construction / development of projects across the country’s capital and major cities. Although, a large percentage of the country’s infrastructural development before 1960 had been grossly financed by the agricultural sector until the uncapping of the ‘the black gold’, which shut up significantly the country’s gross domestic product (GDP) as well as her external reserves..
Nigerian crude oil is a significant asset, both economically and strategically. Nigeria is of course a major crude oil producer in Africa , holding substantial amounts of crude oil reserves that have been exploited since 1956 up till date in 2025 and equally having a projection to last for the next 64 years.
The value of Nigeria’s crude oil is reflected in the price of one barrel (approx. 159 litres/ 42 US gallons) which fluctuates based on global oil market conditions.
The value of Nigerian crude oil is tied to global market prices and OPEC production levels. A large portion of Nigeria’s crude oil is obviously exported to Europe and Asia where the market demand is huge and on the increase.
Nigeria is a major oil producer in Africa and globally. Her crude oil exports contribute significantly to the county’s total exports , accounting for a large percentage of the country’s foreign exchange earnings. She continues play a dominant role as Africa’s largest producer of crude oil, boasting of a proven reserves of 37.50 billion barrels, and a daily production capacity of approximately 2.19 million barrels per day, with the average daily production standing at 1.61 million barrels per day.
With a vast oil reserves estimated to last for another 49 years, according to the Department of Petroleum Resources (D.P.R), Nigeria oil market appears to be one of the safe havens as far as the upstream and downstream oil sector explorations are concerned and Coupled with the fact that Nigeria’s crude oil is amongst the world’s best with her crude being of the light crude with less sulphur.
Nigeria has equally been developing deep water oil production thereby, expanding her oil reserves and production capacity. Nigeria’s crude oil finds its way to major markets in Europe and Asia, with large economies like the United States, France, the Netherlands, Spain and Indonesia being significant importers. This give credit to the value and relevance of the country as a force to reckon with as far as the oil sector is concerned against other players on the global stage.
This makes Nigeria an investment destination, where the major players really do need a rather healthy competition to balance demand and supply flow chain.
REFINERY GROWTH
Crude oil refining plays a crucial role in the Nigerian oil industry, enabling the transformation of crude oil into valuable petroleum products like gasoline, diesel and kerosene. Nigeria’s reliance on imported refined products highlights the significance of domestic refining in achieving energy independence and reducing costs. Refining is obviously a vital part of the country’s oil industry, enabling value addition, reducing import dependence and contributing to economic growth and energy security as well as saving foreign exchange.
Nigeria’s major four refineries are NNPC owned and are located in Port Harcourt, Rivers state, Warri, Delta State and Kaduna in the Northern part of Nigeria.
There are also privately owned conventional refineries as well as modular refineries, they include;
- The Dangote refinery located in Lagos is privately owned, and currently the largest singular integrated refinery in Africa with a designed capacity of 650,000 barrels per day (bpd) owned by the Dangote group.
- Edo refinery and petrochemical company, owned by AIPCC Energy with initial refining capacity of 6000 barrels per day modular refinery located in Ikpoba –Okha L.G.A of Edo state in Nigeria.
- Duport Midstream Company Limited owned by the Bondev group, also located in Edo state is a 2500 barrels per day refinery which was completed in 2022 and started production in 2023.
- The Waltersmith refinery located in Imo state is the biggest commissioned modular refinery in Nigeria with a daily refining capacity of 5000 barrels per day.
- OPAC refinery, Delta state is equally a modular refinery located in Kwale Delta state. It is 10,000 barrels per day modular refinery which was completed in 2021.
A modular refinery is a much smaller, faster and more cost effective alternative to the traditional large scale refineries. It is designed with pre-fabricated skid mounted modules that are transported the site and inter-connected to form a fully functional refinery. These modular units are smaller than conventional refineries, typically with capacities ranging from 1000 to 30,000 barrels per day.
The oil industry is a key driver of economic growth Nigeria, creating jobs as well as supporting related industries with improvement in the oil value chain.