The Dangote Petroleum Refinery, a $20 billion facility in Lekki, Lagos, is ramping up operations to reach its target production capacity of 650,000 barrels per day (bpd) by June. Officials have confirmed that the refinery is currently processing 500,000 bpd but is encountering challenges in securing enough crude oil from the Nigerian National Petroleum Company Limited (NNPC).
The refinery has stated plans to boost crude oil imports in order to maintain operations as local sources are insufficient. As Nigeria’s refining capacity grows, this situation emphasises the urgent need for alternative feedstock sources.
Scaling Production Amid Supply Deficits
While the NNPC is tasked with providing 450,000 bpd for Nigeria’s domestic refineries, only 350,000 bpd is reportedly available for the Dangote Refinery. With its ambitious production goals, officials at the refinery emphasised the need to “look beyond Nigeria” to ensure a steady crude supply.
Speaking on condition of anonymity, a source at the refinery stated, “We are ramping up production and expect to reach 650,000 bpd by midyear. The daily crude requirement for a facility of this scale cannot be met solely by the NNPC. It’s a natural progression to source crude oil wherever it is available globally.”
Another official noted that the refinery’s impact is being felt globally, especially in Europe, where it has reportedly disrupted the market for Premium Motor Spirit (PMS). “The refinery game is for the ‘big boys.’ The Dangote Refinery is among the largest in the world, and its quality output speaks for itself,” the official added.
Naira-for-Crude Initiative and Expanding Storage
The naira-for-crude policy, initiated by President Bola Tinubu in 2023, allows local refineries to purchase crude oil in naira. This policy aims to bolster local refining capacity while conserving foreign exchange. The Dangote Refinery was the first to benefit from the arrangement, receiving crude supplies from the NNPC under the scheme.
However, as the Port Harcourt and Warri refineries return to operation, more facilities are expected to participate in the naira-for-crude programme. Data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) indicates that Nigeria’s refining capacity now stands at 974,500 bpd, with eight functional refineries requiring approximately 770,500 bpd of crude.
To address the shortfall in local crude supply, the Dangote Refinery is constructing eight additional storage tanks, boosting its storage capacity by 41.67% to accommodate 3.4 billion litres of crude oil. Four of these tanks are nearing completion.
Devakumar Edwin, Vice President of Oil and Gas at Dangote Industries, confirmed the expansion: “We are building additional tanks to store imported crude. This is necessary as local supply remains inconsistent. Once completed, these tanks will significantly enhance our operational capacity.”
Refining Nigeria’s Future
The challenges faced by the Dangote Refinery highlight the growing pains of Nigeria’s efforts to transform its oil and gas industry. Experts argue that increasing crude production and optimising supply chains are essential to meeting the needs of local refineries.
As Nigeria looks to position itself as a refining hub, the success of the Dangote Refinery will play a pivotal role. With its high production standards, including the Euro 5-grade petrol, the refinery is already raising the bar for fuel quality in the country.
Six months will pass during the first phase of the naira-for-crude scheme before the Federal Government assesses its effects. As of right now, the Dangote Refinery’s initiatives to boost output and address supply issues demonstrate its resolve to guide Nigeria into a new era of energy independence.
