Nigeria commissions Dangote Refinery in bid to end fuel imports | Oil and Gas News


Owned by Africa’s richest man, the brand new refinery is seen as the reply to persistent gas shortages in Africa’s greatest oil producer.

Nigeria commissioned the Dangote Refinery on Monday amid hopes of remodeling the nation right into a internet exporter of petroleum merchandise, however analysts stated securing crude provides may delay attaining full manufacturing this 12 months.

The administration of outgoing President Muhammadu Buhari sees the refinery as the reply to persistent gas shortages in Nigeria – together with most just lately within the run-up to February’s disputed presidential election.

Nigeria spent $23.3bn final 12 months on petroleum product imports and consumes round 33 million litres (8.7 million gallons) of petrol day by day. The Dangote Refinery has a capability of 650,000 barrels per day.

The plant plans to export the excess petrol, turning Africa’s greatest oil producer into an export hub for petroleum merchandise. It additionally plans to export diesel, in line with Aliko Dangote, Africa’s richest man, who funded the refinery’s building.

The huge petrochemical complicated, stated to be the world’s largest single-train refinery, price $19bn to construct after being delayed for nearly a decade – above preliminary estimates of between $12bn and $14bn – and has excellent debt of round $2.75bn, in line with Nigeria’s central financial institution governor.

The complicated additionally has a 435-megawatt energy station, a deep seaport and a fertiliser unit.

Talking on the fee ceremony, Dangote stated the precedence was to ramp up manufacturing to make sure the refinery may totally fulfill Nigerian demand and remove “the tragedy of import dependency”.

The ceremony was attended by President Buhari.

Nigeria's President Muhammadu Buhari speaks during the commissioning of Dangote Petroleum refinery in Ibeju-Lekki, Lagos, Nigeria May 22, 2023. [Temilade Adelaja/Reuters]
Nigeria’s President Muhammadu Buhari speaks in the course of the commissioning of Dangote Refinery in Ibeju-Lekki, Lagos, Nigeria on Might 22, 2023 [Temilade Adelaja/Reuters]

Crude provide points

Dangote expects to start refining crude in June, however London-based analysis consultancy Vitality Facets stated that commissioning was an intricate course of and that it expects operations to begin later this 12 months, reaching 50-70 p.c subsequent 12 months, with a staggered means of different models into 2025.

The refinery wants a relentless provide of crude, however Nigeria’s oil manufacturing has been declining on account of oil theft, vandalism of pipelines and underinvestment. In April, manufacturing fell beneath a million barrels per day (bpd), under Angola’s output.

Decrease manufacturing would have an effect on the power of state-owned oil firm Nigerian Nationwide Petroleum Company (NNPC) to fulfil an settlement to produce Dangote Refinery with 300,000 bpd of crude, stated economist Kelvin Emmanuel, who authored a report on oil theft final 12 months.

NNPC, with a 20 p.c stake within the refinery, has production-sharing agreements with oil majors like ExxonMobil, Shell and Eni and is entitled to a portion of the crude, which it additionally swaps with merchants for petrol and diesel.

The refinery has not signed an settlement to purchase from oil majors in Nigeria.

That would see Dangote importing crude from merchants like Trafigura and Vitol, Emmanuel stated, at a time when native refining was anticipated to save lots of overseas trade and maintain costs decrease.

Vitality Facets, nevertheless, stated that in the long term, the Dangote Refinery may finish Nigeria’s petrol deficit, reshape the Atlantic basin petrol market and export diesel that meets European Union specs.

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