Higher crude processing capacity and rising petroleum product exports drive sharp expansion in refining activity…..
Nigeria’s oil refining industry recorded its strongest quarterly growth in the second quarter of 2026, expanding by 43.94 per cent year-on-year as increased refining activity, led by the Dangote Petroleum Refinery, continued to reshape the country’s downstream petroleum sector.
The latest performance was contained in the Gross Domestic Product (GDP) report released by the National Bureau of Statistics (NBS) on Monday, August 31, 2026.
The report, which incorporates rebased quarterly GDP estimates, covers the four quarters of 2025 as well as the first and second quarters of 2026.
The latest growth rate points to a significant expansion in refining activity as Nigeria gradually increases its domestic crude processing capacity and begins to emerge as a growing exporter of refined petroleum products.
A major factor behind the changing outlook is the Dangote Petroleum Refinery, which continued to increase its operating capacity during the period under review.
Following maintenance and expansion work completed in February 2026, the facility’s crude oil distillation capacity rose from 650,000 barrels per day (b/d) to 700,000 b/d.
The additional capacity has coincided with a sharp increase in Nigeria’s refined petroleum product shipments, with products from the country increasingly finding their way into markets across Europe, Africa, Asia and Oceania.
NBS data shows that the expansion in refining activity has gathered momentum over the past year.
Oil refining recorded 37.46 per cent year-on-year growth in the first quarter of 2025 before accelerating to 43.94 per cent in the second quarter of 2026.
The latest figure is significantly higher than the growth rates recorded in the second half of 2024 under the rebased GDP series.
Refining activity grew by 19.42 per cent in Q3 2024 and 12.33 per cent in Q4, resulting in full-year growth of 14.08 per cent.
The value of refining activity at current basic prices also increased considerably over the period.
Oil refining was valued at about N1.57 billion in Q1 2025 before rising to N2.81 billion in Q2. The figure stood at N2.69 billion in Q3 and climbed sharply to N8.05 billion in Q4.
In the first quarter of 2026, the value of refining activity stood at approximately N2.46 billion. By Q2, however, it had more than doubled to N5.36 billion.
The Q2 figure represented a 90.85 per cent nominal year-on-year increase, compared with 57.06 per cent recorded in the first quarter.
The latest performance represents a notable shift from previous years, when refining growth, although strong under the earlier GDP series, was not accompanied by the same scale of expansion in domestic processing capacity.
Under the previous series, oil refining grew by 35.84 per cent in Q1 2023, 35.56 per cent in Q2, 37.01 per cent in Q3 and 35.33 per cent in Q4, resulting in full-year growth of 35.81 per cent.
In 2024, the sector recorded growth of 33.38 per cent in Q1, 35.41 per cent in Q2, 32.39 per cent in Q3 and 9.59 per cent in Q4, bringing its full-year growth to 16.67 per cent.
The expansion of Nigeria’s refining industry has been closely linked to the increasing operations of the Dangote Petroleum Refinery.
Located within the Lekki Free Trade Zone near Lagos, the facility has increased its crude processing capacity beyond its original 650,000 b/d nameplate capacity to 700,000 b/d following performance tests and expansion work.
The refinery’s growing demand for crude has also become evident in data on domestic crude supply to local refineries.
Figures from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) show that domestic crude oil and condensate supply to Nigerian refineries reached 97.4 per cent in Q2 2026.
A total of 53.7 million barrels was supplied to local refineries between April and June, with the Dangote facility accounting for the largest share of crude offered to domestic refiners.
The refinery required about 63 million barrels during the quarter, while producers offered 68.1 million barrels.
It ultimately accepted 52.6 million barrels, representing roughly 78 per cent of the crude volume offered to it.
The volume supplied to local refineries represented a substantial increase from the first quarter.
In Q1, domestic refineries received only 28.5 million barrels despite 61.9 million barrels being allocated and 68.7 million barrels offered by producers.
The increase in crude deliveries, combined with the Dangote refinery’s higher processing capacity, has strengthened Nigeria’s ability to convert locally produced crude into refined petroleum products.
It has also begun to alter the country’s traditional petroleum trade pattern, with Nigeria increasingly shipping refined products abroad.
Oil sector also records stronger performance
The surge in refining activity came alongside an improvement in Nigeria’s broader oil sector during the second quarter.
The country’s average crude oil production rose to 1.72 million barrels per day in Q2 2026, compared with 1.68 million b/d in the corresponding quarter of 2025 and 1.55 million b/d in Q1 2026.
The oil sector expanded by 7.31 per cent year-on-year during the quarter.
Although this was below the 20.46 per cent growth recorded in Q2 2025, it represented a significant improvement from the 2.57 per cent growth recorded in Q1 2026.
On a quarter-on-quarter basis, the oil sector grew by 10.91 per cent.
Its contribution to Nigeria’s real GDP also increased during the period, reaching 4.16 per cent compared with 4.05 per cent in Q2 2025 and 3.92 per cent in Q1 2026.
The broader Nigerian economy also maintained its expansion during the quarter.
Real GDP grew by 4.43 per cent year-on-year in Q2 2026, compared with 4.23 per cent in the same quarter of 2025.
The non-oil sector recorded 4.31 per cent growth, an improvement from 3.64 per cent in Q2 2025 and 3.94 per cent in Q1 2026.
Despite the stronger performance of the oil and refining segments, the non-oil economy remained dominant, accounting for 95.84 per cent of real GDP in the second quarter.
Nigeria’s refined products gain ground overseas
The growth in refining capacity is not only changing domestic petroleum supply but is also increasingly positioning Nigeria as an exporter of refined products.
Data from the US Energy Information Administration (EIA) showed that Nigeria’s seaborne petroleum product exports averaged 350,000 barrels per day in Q2 2026.
That represented a dramatic increase from the annual average of 46,000 b/d recorded in 2023.
Overall seaborne petroleum product shipments from Nigeria averaged 561,000 b/d during the second quarter.
Europe emerged as one of the major destinations, receiving about 130,000 b/d during the period.
That was substantially higher than the 40,000 b/d recorded in 2025 and 15,000 b/d in 2023.
Other African markets collectively received nearly 120,000 b/d, while approximately 110,000 b/d was shipped to markets in Asia and Oceania.
The figures point to a growing role for Nigeria in the international refined petroleum products market, as increased domestic processing capacity enables the country to move beyond its traditional dependence on crude oil exports.
The continued expansion of the Dangote refinery, alongside rising crude availability to domestic refiners, could therefore further increase Nigeria’s refined product output and export volumes if the trend in crude supply and refinery utilisation is sustained.
