Nigeria as Africa’s petrochemical hub

Petrochemicals play a vital role in the economy. The products of the industry are the building blocks in many industries including polymers, synthetic rubber, synthetic fibres, fibre intermediates and basic chemicals. The petrochemical industry continues to be impacted by the globalization and integration of the world economy.

The industry is important as it has several linkages with other sectors of an economy. Petrochemicals have backward linkages with other industries in petroleum refining, natural gas processing and forward linkages with industries that deal in a variety of downstream products.

The industry also offer alternatives, which serve as substitutes for natural products and hence, has the capacity to meet the constantly growing demand that would otherwise strain the natural resources. In addition, downstream processing units contribute to employment generation and entrepreneurial development in the SME segment, serving a vital need of the economy.

Feedstock determines the success of petrochemical producers, as they represent the majority of production costs and natural gas has been identified as the primary feedstock for petrochemical industry.

Nigeria is renowned for its natural gas reserve of approximately 187 trillion cubic feet (tcf) of proven gas reserves and a 600 tcf unproven gas reserves. Thus, Nigeria can be described as a gas province with oil. Nigeria has the largest reserves in Africa and the ninth largest in the world.

However, the abundant natural gas resources have not translated to a robust petrochemical industry. Nigeria’s failure to develop petrochemical plants is largely the reason manufacturing companies are importing about 80 per cent of their raw materials worth over $10 billion yearly.

All the foam, plastic, paint and textile companies in the country depend on derivatives most of which are imported because the local petrochemical industry is in shambles. Products made from petrochemicals include plastics, soaps, detergents, solvents (such as paint thinners), paints, drugs, fertilizer, pesticides, explosives, synthetic fibers and rubbers, and flooring and insulating materials. They are also found in such common products as aspirin, cars, clothing, compact discs, video tapes, electronic equipment, and furniture.

The Nigeria Gas Master plan (NGMP) was designed to turn the enormous gas reserves in the country into a viable economic vehicle which can trigger petrochemical industry and revolutionize the economy.

Under the strategic themes of the GMP, it is envisaged that the plan will deliver gas to power for at least threefold increase in generation capacity by 2015, achieve reasonable level of gas based industrialization by positioning Nigeria as the undisputed regional hub for gas based industries such as fertilizer, petrochemicals and methanol.

In 2013, David Ige, the then Group Executive Director, Gas for Nigerian National Petroleum Corporation said that the reforms in Nigeria’s gas sector will make Nigeria a regional hub for petrochemical and fertilizer production by 2017. According to him, “all that we need to make Nigeria a regional hub of petrochemical and fertilizer is in place, and by 2017 Nigeria clearly will become the regional hub of gas in Africa.”

Barely one year to the target date, there has been no major move towards the realization of the objective.

There are currently three petrochemical plants in Nigeria, including Kaduna Refinery and Petrochemicals Company (KRPC), Warri Refinery and Petrochemicals Company (WRPC) as well as Indorama Eleme Petrochemicals Company (IEPC). However, their efforts thus far are not enough to turn Nigeria into a major petrochemical hub for Africa.

Government needs to act as an enabler both in terms of seeing through a robust policy and putting incentives in place that will ginger private sector to action. The natural gas sector is restricted by the lack of infrastructure to monetize natural gas that is currently flared. Government should tackle this issue in addition to seeing that the Nigerian Gas Mater plan is fully implemented.