Amidst rising anticipation, the Dangote Petroleum Refinery is currently importing crude oil, expecting to receive its inaugural crude cargo in a fortnight, according to Devakumar Edwin, the Executive Director of Dangote Group.
While the Nigerian National Petroleum Company Limited (NNPCL) serves as Nigeria’s crude oil trading representative, Edwin, in a recent dialogue with S&P Global Commodity Insights, highlighted that NNPCL had earmarked its crude for other ventures.
Although specifics on the involved entities remain undisclosed, NNPCL did confirm last month its engagement in a $3 billion crude oil-for-loan agreement with the African Export-Import Bank. This arrangement lets the oil company allocate anticipated oil outputs as repayment for the loan.
Furthermore, sources within NNPC revealed that the company couldn’t address Dangote’s earlier requirements due to its contractual engagements with various parties. However, officials from the oil corporation have indicated ongoing plans to fulfil Dangote’s crude demands by November.
Reassuring stakeholders, Edwin emphasised that Dangote refinery’s crude importation is only a short-term measure. By November, supplies from NNPCL will commence. Further, Edwin confirmed that production processes, set to initiate in October 2023, are projected to yield up to 370,000 barrels daily.
This production will cater to manufacturing automotive gas oil (commonly known as diesel) and jet fuel. By the close of November 2023, the refinery will commence the production of Premium Motor Spirit, also known as petrol.
According to a report by Head Topics, industry experts opine that a noticeable decline in diesel and jet fuel prices will only manifest when the Dangote refinery commences sourcing its crude locally, not through imports.
Edwin, speaking further, expressed the refinery’s strategic vision to gradually boost petrol production, targeting an impressive 650,000 barrels per day by November 30. Addressing concerns regarding shifts in the initial timeline, Edwin elaborated that commitments by NNPCL to another entity were the cause of the brief deferment. However, he reinforced that from November 2023 onwards, the refinery will predominantly operate on Nigerian crude oil.
Echoing this sentiment, Chief John Kekeocha, National Secretary of the Independent Petroleum Marketers Association of Nigeria, voiced that Dangote’s delay in refined product production extended beyond expectations. However, he remains optimistic that once the local crude oil supply commences, the prices of these commodities in Nigeria will experience a downturn.
Furthermore, Mike Osatuyi, National Controller of Operations at IPMAN, views the impending start of petrol refining by November as a heralding end to petrol importation in Nigeria. He highlighted the positive implications for oil marketers, the general public, and the Nigerian government: “It’s a monumental stride for Nigeria and the current administration.”
Regarding the refinery’s immense potential, Edwin further elaborated that, apart from heavy Angolan grades, the Dangote refinery can process a diverse range of African crude rates, including those from the Middle East and the US. He affirmed that by meeting local requirements and focusing on exporting the surplus, “This venture will significantly contribute foreign exchange to Nigeria.”
Dangote Group’s spokesperson remained unavailable for immediate comment on this development.
