The $20 billion Dangote Refinery is on track to achieve its full refining capacity of 650,000 barrels per day (bpd) in the coming months.
According to recent disclosures from refinery officials, the facility is currently processing 500,000 bpd and aims to reach its maximum capacity by June this year.
A significant obstacle preventing the refinery from hitting its full capacity has been the insufficient supply of crude oil from the Nigerian market.
To address this issue, the refinery plans to import additional crude oil, which would enable it to ramp up production to the targeted 650,000 bpd.
Confidential sources, as reported by Punch, revealed that the refinery intends to procure more crude oil from international markets, despite continuing to receive allocations under the naira-for-crude policy introduced by President Bola Tinubu last year.
Currently, the Nigerian National Petroleum Corporation (NNPC) supplies between 350,000 and 450,000 bpd of crude to the refinery.
“It’s not that NNPC cannot meet the requirement, but we’re talking about a 650,000 bpd refinery,” one source explained.
“Currently, we’re operating at 500,000 bpd, and we aim to ramp up to 650,000 bpd by midyear. To achieve this, we need to source crude oil wherever it is available.”
In the past year, the refinery faced significant hurdles due to disagreements with NNPC over the supply of crude oil. These disputes hampered local production of premium motor spirits (PMS) and other fuel products.
The Dangote Refinery accused NNPC of selling crude oil at inflated prices, demanding payment in US dollars instead of naira, or claiming unavailability of crude.
This forced the refinery to procure oil from international markets, including Brazil and the United States, at elevated costs.
In response, the Dangote Group accelerated plans to begin production at its Niger Delta upstream projects in Oil Mining Leases (OMLs) 71 and 72. Initial production of 20,000 bpd is expected in early 2025, with further scaling in the pipeline.
To stabilize crude supply for domestic refineries, the Nigerian government launched the naira-for-crude initiative on October 1, 2024. Under this program, crude oil is sold to refineries, including Dangote, in naira. In return, the refineries supply PMS and diesel of equivalent value to the domestic market, also in naira.
The Minister of Finance, Wale Edun, confirmed the implementation of this policy in a statement on October 5, 2024.
The program aims to bolster local refining capacity and reduce Nigeria’s reliance on imported petroleum products.
With the resolution of crude supply challenges and the implementation of supportive government policies, the Dangote Refinery is poised to reach its full refining potential.
This milestone would mark a significant turning point in Nigeria’s oil sector, potentially transforming the country from a major importer of fuel products to a net exporter.
