The Dangote Petroleum Refinery, located in Lekki, Nigeria, is currently producing a significant amount of fuel—about 500,000 barrels per day (bpd). However, the refinery is facing challenges in sourcing enough crude oil to maintain and increase this production level. The Nigerian National Petroleum Company Limited (NNPC), which is the state-owned oil company, has been struggling to provide the necessary crude oil supply, which is crucial for the refinery’s operations.
To meet its production goals, the Dangote refinery is planning to import additional crude oil from other countries. They aim to boost their output to 650,000 bpd by June of this year. Officials from the refinery have stated that while the NNPC is still involved in supplying crude oil, it is not sufficient to meet the refinery’s growing needs. They explained that the refinery requires a lot more crude oil than what the NNPC can currently provide.
The refinery’s officials clarified that the NNPC is capable of supplying crude oil, but the daily needs of the Dangote refinery exceed what the NNPC can deliver. They emphasized that it is normal for large refineries like theirs to look for crude oil from various sources, especially as they ramp up production.
A consultant associated with the refinery highlighted that the Dangote refinery is one of the largest in the world, capable of refining 650,000 bpd. He pointed out that there are very few refineries of this size globally, and the Dangote refinery is already making an impact on the fuel market, even affecting prices in Europe.
In terms of fuel quality, the Dangote refinery is producing petrol that meets the Euro 5 standard, which is a high-quality fuel that performs better in vehicles. This quality is evident to consumers in Nigeria, who are experiencing better fuel efficiency.
As Nigeria’s refining capacity increases, the current allocation of 450,000 barrels of crude oil for local refineries is proving to be inadequate. The Nigerian Upstream Petroleum Regulatory Commission has indicated that a total of 770,500 barrels of crude oil will be needed daily to meet the requirements of the Dangote refinery and other refineries in the country.
In July last year, President Bola Tinubu announced a new initiative allowing local refineries to purchase crude oil in Nigerian naira, rather than in foreign currency. This program, which initially focused on the Dangote refinery, aims to stabilize the local fuel market. As more refineries come back online, including the Port Harcourt and Warri refineries, they will also be included in this naira-for-crude arrangement.
Looking ahead, the Dangote refinery is preparing to import more crude oil and has started constructing eight new storage tanks to increase its capacity for holding crude oil. This expansion is necessary due to the unreliable local supply from the NNPC. The refinery’s vice president mentioned that these new tanks will significantly enhance their storage capacity, allowing them to stockpile more imported crude oil.
In summary, while the Dangote refinery is currently producing a large volume of fuel, it is facing challenges in sourcing enough crude oil from local suppliers. As a result, they are turning to imports to meet their production goals and are expanding their storage capacity to support this strategy.
