In a historic moment for Nigeria’s oil industry, the Dangote Refinery has commenced the production of petrol for the first time in 28 years, signaling a significant shift in the nation’s energy landscape. The 650,000 barrels per day (bpd) refinery, located in Lagos, has successfully completed test runs and is set to begin the immediate sale of its products, according to sources familiar with the development.
The start of petrol production at the Dangote Refinery is expected to bring much-needed relief to Nigerians, who have been grappling with severe fuel shortages across the country. The refinery, owned by Africa’s richest man, Aliko Dangote, has been meticulously tested and all parameters required to certify its operations have been met.
Nigeria, despite being Africa’s largest oil producer, has struggled for decades with fuel shortages due to the inability to keep its four state-owned refineries operational. Billions of dollars have been spent on maintenance over the years, yet these facilities have remained largely dormant, forcing the country to rely on costly fuel imports.
With Nigeria consuming approximately 66 million liters of petrol daily, the Dangote Refinery’s new output is expected to significantly reduce the nation’s dependency on imported fuel. This development could save the country billions of dollars in foreign exchange annually, while also ensuring a more stable supply of petrol for domestic use.
The commencement of petrol production at the refinery is particularly timely, as the Nigerian National Petroleum Company Limited (NNPC), the country’s primary fuel importer, has been facing severe challenges. Burdened by debts exceeding $6 billion, the NNPC has struggled to meet domestic fuel demands, resulting in persistent fuel queues since July.
The Dangote Refinery, which has been gradually ramping up its operations after years of delays, is now poised to transform not only Nigeria’s energy sector but also the global fuel market. The facility is expected to process 650,000 barrels of oil per day at full capacity, converting over half of this into petrol. Initially, production is projected to reach about 90,000 bpd in the fourth quarter, increasing to nearly 250,000 bpd by the second half of the following year.
Randy Hurburun, a senior refinery analyst at Energy Aspects Ltd., highlighted the significance of this development, noting that at full capacity, the refinery could produce around 330,000 bpd of petrol, which is more than 1% of global demand for road fuel. Key to this output is the operation of a reformer unit, which has already begun producing blendstock for petrol.
In addition to easing domestic supply constraints, the Dangote Refinery’s production is likely to impact regional and global fuel markets. Last year, Nigeria imported nearly 250,000 bpd of petrol, predominantly from Europe. With the new refinery’s output, this demand is expected to decrease, altering trade dynamics in fuel markets.
The refinery’s petrol production is also expected to play a crucial role in stabilizing Nigeria’s fuel supply, with the NNPC emerging as the sole buyer of the refinery’s output. Devakumar Edwin, a vice president at Dangote Industries Limited, confirmed that petrol would soon be available in the local market. “If no one is buying it, we will export it, as we have been doing with our aviation jet fuel and diesel,” Edwin stated.
The refinery’s start-up comes at a time when global oil markets are experiencing fluctuations. According to a recent survey, the Organization of Petroleum Exporting Countries (OPEC) saw its output in August fall to its lowest level since January, despite a small increase in Nigeria’s exports. The drop in OPEC output was primarily due to disruptions in Libya and ongoing voluntary supply cuts by other members.
As Nigeria takes this significant step towards self-sufficiency in fuel production, the implications for both the local and global markets are profound. The successful ramp-up of operations at the Dangote Refinery marks the beginning of a new era for Nigeria’s oil sector, offering the potential to finally overcome the challenges that have plagued the industry for decades.
