Nigeria’s Aradel Holdings Plc said it plans to produce petrol at its modular refinery in 2027, following the removal of subsidies that make the fuel more profitable to sell.
The government’s control of fuel prices was scrapped in 2023, and the deregulation of the market ‘has now created a path’ to manufacture petrol, Temitayo Ogunbanjo, who manages Aradel’s refinery arm, said on the sidelines of a conference in Abuja. The plant currently produces kerosene, diesel, gas oil and naphtha.
For years, Nigerian refiners avoided petrol production altogether. A federal government-set pump price, propped up by a subsidy that at one point cost the federal treasury more than $10 billion annually, left domestic refiners unable to compete with landed imports sold below cost.
That calculus changed after President Bola Tinubu ended the subsidy in his first address after taking office, a move that sent pump prices surging and inflation higher, but also opened the door for local refiners to enter a market long dominated by imports and, more recently, by the Dangote Petroleum Refinery’s 650,000-barrel-a-day complex outside Lagos.
Aradel’s 11,000-barrel-a-day plant, located in Rivers State in the Niger River Delta, is dwarfed by that scale, but the company is betting there is room for smaller, faster-to-build refineries to chip away at Nigeria’s reliance on imported fuel.
The company is also considering expanding the facility, examining potential crude supply arrangements and export logistics, Ogunbanjo said.
Aradel’s business, which spans crude production, refining and distribution, has been boosted by oil-price shocks stemming from the US-Iran war.
Higher crude prices have lifted earnings from its upstream operations even as they raise input costs elsewhere, a dynamic that has benefited integrated producers able to capture margin across the barrel.
The company is also weighing investments in aviation fuel production, a category Ogunbanjo said has emerged as a key export opportunity to Europe. Jet fuel demand has been supported by a rebound in international air travel and by European buyers seeking alternative supply sources amid disruptions to traditional trade routes.
Nigeria, Africa’s largest crude producer, has for decades exported crude oil only to re-import the refined products its population needs, a paradox that successive governments have pledged to fix. The Dangote refinery’s start-up has already begun to reshape that picture, cutting the country’s petrol import bill and pressuring the economics of fuel importers.
Modular refineries like Aradel’s, while far smaller, have been positioned by the government as a complementary piece of the puzzle, capable of serving regional markets and processing crude grades that may not suit larger plants.
Analysts have cautioned that profitability for petrol production at smaller Nigerian refineries will depend on crude feedstock costs, naira volatility, and continued enforcement of the deregulated pricing regime.
Reversals of fuel-subsidy policy have occurred before in Nigeria, and any renewed political pressure to cap pump prices could undercut the investment case for new petrol capacity.
Aradel listed on the Nigerian Exchange last year, giving it a public listing alongside Nigeria’s largest energy companies. The company has positioned itself as a home-grown alternative to international oil majors that have been exiting onshore Nigerian assets in recent years, several of which Aradel and its peers have acquired.
Ogunbanjo did not give a specific investment figure for the petrol unit or the potential capacity expansion, saying details would be firmed up as the company advances engineering studies over the next year.