Aradel Holdings Plc, a Nigerian energy company, has set a target of 2027 to commence petrol production at its modular refinery in Rivers State, potentially adding a new domestic source of fuel to Nigeria's evolving downstream market. The announcement was made by Temitayo Ogunbanjo, who oversees Aradel's refining business, on the sidelines of a conference in Abuja.
Subsidy Removal and Deregulation Pave the Way
Ogunbanjo credited the removal of petrol subsidies and the deregulation of the downstream sector for creating a clearer commercial path for local refiners to produce petrol. For years, Nigerian refiners largely avoided petrol production because government-controlled pump prices and fuel subsidies made it difficult for local plants to compete with imported products.
This changed dramatically in 2023 when President Bola Tinubu removed the petrol subsidy shortly after taking office. The decision pushed pump prices sharply higher and contributed to inflationary pressures but also opened the market to greater private-sector participation. With prices now more closely determined by market forces, domestic refiners have a stronger incentive to invest in petrol production.
Current Operations and Expansion Plans
The 11,000-barrel-per-day facility currently produces kerosene, diesel, gas oil, and naphtha. The company is now considering petrol production as part of plans to expand its refining operations. Ogunbanjo said Aradel is also examining a potential expansion of the refinery, crude supply arrangements, and export logistics. The company has yet to disclose the investment required for the petrol unit or any expanded capacity, with engineering studies expected to determine the final scope of the project over the coming year.
The shift has already transformed Nigeria's downstream sector, with the 650,000-barrel-per-day Dangote Petroleum Refinery becoming the biggest local player and reducing the country's dependence on imported refined products. Although Aradel's refinery is much smaller than Dangote's giant facility, the company believes modular plants can play an important role in meeting domestic and regional fuel demand.
Aviation Fuel and Export Opportunities
Beyond petrol, Aradel is assessing opportunities to increase aviation fuel production, with Europe emerging as a potential export market. The company's integrated business model, which spans crude production, refining, and distribution, could give it an advantage by allowing it to capture value across different stages of the oil industry. Higher crude prices have also boosted earnings from its upstream operations, although rising feedstock costs could increase expenses for its refining business.
Challenges and Future Outlook
Nigeria's modular refineries are increasingly being positioned as complementary players alongside larger facilities such as Dangote's refinery. However, analysts say the profitability of petrol production at smaller plants will depend heavily on crude supply costs, exchange-rate movements, and the continued operation of a deregulated pricing regime. Any future return to government-controlled petrol prices could weaken the business case for new refining investments.
Aradel, which was listed on the Nigerian Exchange last year, has positioned itself as a major home-grown energy company as international oil firms continue to sell some of their Nigerian assets. Its planned petrol production would mark another step in Nigeria's long-running effort to reduce the costly cycle of exporting crude oil while importing the refined fuels consumed by its population.
Legit.ng earlier reported that Nigerians may soon have another operational refinery as billionaire businessman Azibapu Eruani's Azikel Refinery in Yenagoa, Bayelsa State, enters its final stage of construction. The refinery is designed to process 25,000 barrels of crude oil or condensate daily and produce petrol, diesel, aviation fuel, kerosene, liquefied petroleum gas, and other refined products. The refinery is designed as a full-slate hydro-skimming plant with a capacity to process 25,000 barrels of crude oil or condensate per day.
