The Dangote Petroleum Refinery is increasing its capacity to store imported crude oil by building eight additional storage tanks, a step designed to tackle supply challenges.
The refinery is expanding its storage capacity by 6.29 million barrels, or 1 billion litres, according to an Africa study study. Unreliable domestic crude oil supplies have forced the $20 billion refinery to increase its reliance on imports, which is why it is expanding.
Officials at the refinery cited insufficient crude oil supply from the Nigerian National Petroleum Company Limited (NNPC) as a key factor driving the shift towards imported crude.
The eight new tanks will raise the refinery’s crude storage capacity by 41.67%, from 2.4 billion liters to 3.4 billion liters. “Importing crude from other countries rather than purchasing locally requires us to maintain higher stockpiles,” said Devakumar Edwin, Vice President of Oil and Gas Business at Dangote Industries. “We have started constructing eight additional crude tanks to store 1 billion liters. Four of them are nearing completion,” he added.
Currently, the refinery operates 20 crude storage tanks, each with a capacity of 120 million liters, totaling 2.4 billion liters. Its refined product storage tanks have a combined capacity of 2.34 billion liters.
The Dangote Refinery began producing diesel and aviation fuel in January 2024, followed by petrol in September. Its products are distributed within Nigeria and exported to other countries.
Despite the refinery’s operations, Edwin noted that crude oil supplied by the NNPC remains insufficient. Nigeria, Africa’s largest oil producer, was heavily dependent on fuel imports until the Dangote Refinery became operational.
The NNPC’s Warri and Port Harcourt refineries have also resumed operations, requiring crude oil supplies in addition to allocations for servicing the company’s debts. Meanwhile, Nigeria faces ongoing challenges of underinvestment and production disruptions caused by theft and pipeline vandalism.
The Nigerian Upstream Petroleum Regulatory Commission recently reported that crude oil production reached 1.45 million barrels per day (mbpd) in November, achieving 99% of its 1.5 mbpd OPEC quota.
Dangote’s expansion of its crude storage facilities may signal a shift away from the naira-for-crude initiative introduced by President Bola Tinubu. Under this initiative, approved in July 2023, NNPC began selling crude oil to local refineries in naira, with the Dangote Refinery serving as a pilot.
The program, implemented in October 2023, required the NNPC to supply 385,000 barrels per day to the Dangote Refinery, paid for in naira. Aliko Dangote, President of Dangote Industries, stated in December that the initiative had contributed to reducing fuel prices in Nigeria.
Nigerian car owners are using the refinery’s petrol products more frequently as it increases production, which suggests that the market is becoming more accepting.
