Nigeria’s Dangote refinery, the largest in Africa, is set to achieve production levels of 550,000 barrels per day (bpd) this year, representing 85% of its full capacity. However, the facility faces significant challenges due to insufficient domestic crude supplies, according to Chief Executive Aliko Dangote.
The 650,000-bpd capacity refinery, which commenced operations earlier this year after several years of delays and a construction cost of $20 billion, has only received five crude cargoes from the state oil firm Nigerian National Petroleum Corporation (NNPC) since its start-up. This is a third of the 15 cargoes initially expected.
The NNPC had previously agreed to supply the refinery with 300,000 bpd. Nonetheless, it has struggled to meet this commitment due to low production levels and the diversion of some crude supplies to gasoline import exchanges. Consequently, the Dangote refinery has had to increase its crude imports to sustain operations.
Adding to the challenges, brokers have been imposing a $4 mark-up per barrel of crude, further impacting operational costs.
Despite these hurdles, the Dangote refinery is on track to significantly bolster Nigeria’s refining capacity, reducing the country’s dependency on fuel imports and potentially altering the landscape of the regional oil market. However, the ongoing issues with domestic crude supply and the associated costs highlight the complexities facing Nigeria’s oil industry.
Chief Executive Aliko Dangote remains optimistic about the refinery’s future, stressing the importance of overcoming the current supply constraints to fully realise the plant’s potential.
