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Nigeria Petrochemicals Report 2012
Business Monitor International, Dec 2011, Pages: 46
The Nigerian petrochemicals industry will be primarily focused on utilising gas resources for fertiliser production, although a promised injection of Saudi investment could see Nigeria host sub-Saharan Africa’s largest petrochemicals complex with world-scale olefins and polymers capacity, according to BMI’s latest Nigeria Petrochemicals Report.
In 2011, Nigeria had olefins production capacities of 300,000tonnes per annum (tpa) ethylene and 125,000tpa propylene with thermoplastic resins capacities of 240,000tpa linear low-density polyethylene (LLDPE) and 95,000tpa polypropylene (PP), unchanged from the previous year. The main risks to growth in the market are unrest in the Niger Delta, which has reduced petrochemicals output, and the poor business environment climate. The main focus for the petrochemicals industry in coming years is the fertiliser sector.
By 2011, Nigeria had 1mn tpa of urea capacity, half of which was started up in 2009 at the Notore Chemicals complex at Onne in Rivers State. In addition, Eleme Petrochemicals Company Ltd (EPCL) is on the way to establishing one of the world’s largest fertiliser complexes at Eleme in Rivers State.
This should see 1mn tpa urea capacity added in 2014-15, although it is unclear whether it will expand to 3mn tpa as originally suggested. The timescale has also slipped by at least two years and any further development of urea capacity beyond the 1mn tpa currently planned is unlikely to be completed within the next five years. The fertiliser complex planned by India’s Nagarjuna with capacities of 730,000tpa ammonia and 1.25mn tpa urea is scheduled to come onstream in 2014-15, but BMI believes that project delays are inevitable in the Nigerian context and does not envisage completion until 2016 at the earliest.
Nigeria’s Dangote Group is also planning a fertiliser complex with combined urea capacity of 2.8mn tpa and ammonia capacity of 800,000tpa slated to begin production in 2014. Again, we expect delays pushing the project back to 2015. By 2016, BMI forecasts total urea capacity of 6.05mn tpa, more than six times the level in 2011. It will make Nigeria self-sufficient in fertiliser and a net exporter.
Endemic corruption, high risks to physical security and poor physical infrastructure are highly visible constraints to the country's business environment, which the government has made efforts to overhaul, with mixed results. Other, less publicised, constraints that hamper the Nigerian private sector include an under-resourced judiciary, weak enforcement of property rights and poor human capital. Resolutions to these problems are not currently sought with as much energy as more publicised business constraints, and are therefore likely to remain obstacles in the medium term. Top of Nigeria's list of infrastructure shortcomings is the poor performance of the energy sector, with 54% of manufacturers citing unreliable power the most binding constraint to efficient production. Ageing transmission facilities and gas supply shortages, exacerbated by gas pipeline vandalism in the Niger Delta, are the primary problem.
Nigeria comes last in BMI’s Business Environment Ratings for the Middle East and Africa with 32.0 points, up 1.2 points from 2011 due to an improvement in the risk environment as well as progress in a planned increase in petrochemicals capacities. Nigeria lies in 11th place in our regional rankings, 6.6 points behind Algeria.
Business Monitor International's Nigeria Petrochemicals Report provides industry professionals and strategists, corporate analysts, petrochemical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Nigeria's petrochemicals industry.
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