ABUJA–Nigeria on Monday signed a Memorandum of Understanding (MOU) with an American energy firm to build six oil refineries, in a project worth US$4.5 billion, a government statement said. Nigeria is Africa’s largest oil producer but its refining infrastructure has largely crumbled, turning the country into a net importer, which often pays high prices for its own crude that has been processed abroad.
The deal between U.S.-based Vulcan Energy, the Nigerian government and a local firm, aims to build six refineries with a combined capacity of 180,000 barrels per day, Nigeria’s Trade and Investment Ministry said in a statement, which also listed the 697.5 billion naira (US$4.5 billion) price tag. Two of the refineries are to be completed within a year, according to the terms of the MOU.
“This is the beginning of changing our old paradigm from exporting just raw materials and exporting jobs to the Western countries,” Trade and Investment Minister Olusegun Aganga said in the statement.
Nigeria produces around 2 million barrels a day of crude, making it the world’s eighth largest producer, but its petroleum industry has for years been riddled with corruption and poor management.
Last week, President Goodluck Jonathan fired the chief executive of the state oil firm NNPC, a move his office said was designed to boost transparency and accountability.
Vulcan’s vice president, Jim Mansfield, said the MOU highlighted Nigeria’s attractiveness as an investment destination.
“The funding for the project will be a non-Nigeria source and is from investors who firmly believe that Nigeria is a good place to do business,” he was quoted in the statement as saying.
Houston-based Vulcan currently operates in several U.S. states as well as Canada.