The Dangote Petroleum Refinery is currently in the process of importing crude oil and anticipates receiving its first crude cargo in approximately two weeks, according to Devakumar Edwin, the Executive Director of the Dangote Group.
The Nigerian National Petroleum Company Limited (NNPCL), which trades crude oil on behalf of Nigeria, has committed its crude to other entities, although these entities were not disclosed by Edwin. NNPC had previously entered into a $3 billion crude oil-for-loan agreement with the African Export-Import Bank, allowing the bank to use future oil production as repayments for the loan.
The Dangote Group’s boss clarified that this crude importation by the refinery is temporary, as they are expected to receive supply from NNPCL starting in November.
The refinery plans to commence the production of up to 370,000 barrels per day of crude, which will yield Automotive Gas Oil (diesel) and jet fuel, in October 2023. For Premium Motor Spirit (petrol), production is expected to start by November 30, 2023.
It’s expected that diesel and jet fuel prices will decrease when the Dangote refinery starts using Nigerian crude oil rather than importing it. Edwin emphasized that the refinery’s readiness to receive crude oil, stating, “Right now, I’m ready to receive crude. We are just waiting for the first vessel. And so, as soon as it comes in, we can start.”
The delay in receiving crude oil from NNPC was attributed to the company having committed its crude to other entities on a forward basis. However, plans are underway to ensure Dangote’s crude oil needs are met by November.
The Dangote refinery, once operational, will play a significant role in Nigeria’s fuel supply and foreign exchange generation. It will help alleviate fuel supply challenges in West Africa and contribute to the country’s economic development.
Marketers anticipate that once the refinery begins producing diesel and jet fuel from Nigerian crude, the costs of these commodities in Nigeria will decrease. This development is seen as a positive step toward ending fuel importation in Nigeria.
Efforts to reach the Dangote Group for an official response were unsuccessful, but they indicated that an official press release would be issued in due course.
The Dangote refinery’s production commencement was initially expected in August, but delays have postponed its operational start.