Dangote Refinery Reaches 85% Capacity, Poised to Transform Nigeria’s Fuel Market

Nigeria’s Dangote Refinery, one of the largest privately-owned oil refineries in Africa, has reached an impressive 85% of its refining capacity, signaling significant progress towards full-scale operations. This milestone was confirmed by Edwin Devakumar, the head of the refinery, who stated that the facility is now refining 550,000 barrels per day (bpd) of crude oil. The refinery, which is capable of processing 650,000 bpd, is expected to deliver European-standard refined products by January, further solidifying its position as a major player in the global oil refining market.

Located in Lagos, Nigeria, the Dangote Refinery was built by Nigerian billionaire Aliko Dangote with the goal of reducing Nigeria’s dependency on imported refined petroleum products and providing high-quality fuels comparable to those produced in European refineries. However, the refinery has faced some challenges along the way, particularly in securing sufficient crude oil for its operations.

One of the primary obstacles came from a dispute with the Nigerian state-owned oil firm, the Nigerian National Petroleum Corporation Limited (NNPCL). Under an agreement, Dangote had committed to selling a 20% stake in the refinery to NNPCL for $2.76 billion, with payments structured over a period of five years. The deal was meant to ensure a steady supply of crude from the state oil company, but NNPCL later struggled to fulfill its part of the agreement. Specifically, the NNPCL was unable to deliver the agreed 300,000 bpd of crude oil due to commitments made to financiers that were linked to a higher production target they failed to meet.

As a result, the Dangote Refinery was forced to source crude oil from international markets to continue its operations. Despite this setback, the refinery has successfully ramped up production, achieving 85% of its designed capacity, and is now producing refined products such as diesel, naphtha, jet fuel, and petrol. The refinery began processing crude oil in January and started producing petrol in September, a key step in addressing Nigeria’s long-standing fuel shortages.

However, even with its progress, Dangote Refinery still faces challenges in distributing its products domestically. Local fuel traders and even NNPCL are still involved in importing refined petroleum products, highlighting the ongoing challenges in Nigeria’s fuel supply chain. Recently, the NNPC announced that it had restarted its 60,000 bpd Port Harcourt refinery in an effort to boost domestic refining capacity and reduce reliance on imports.

To ease the burden on Nigerian consumers, Dangote Refinery recently lowered the price of its petrol to 899.50 naira ($0.58) per litre from 970 naira, offering a reprieve for citizens amid the holiday season. This move is part of the refinery’s broader strategy to stabilize the domestic fuel market and ensure a reliable supply of affordable fuel for the population.

As Dangote Refinery nears full production capacity, it is expected to play a pivotal role in reshaping Nigeria’s energy landscape. The refinery’s ability to produce high-quality fuels locally will not only reduce the country’s reliance on imported products but also boost its export potential. In the coming months, as the refinery continues to optimize its operations and distribution channels, it may emerge as a key contributor to Nigeria’s energy security and economic growth.

While there are still hurdles to overcome in terms of crude supply, distribution logistics, and domestic fuel pricing, the progress made by the Dangote Refinery marks a significant step forward for Nigeria’s oil sector. With continued investment, strategic partnerships, and a focus on operational efficiency, the refinery is well-positioned to meet both domestic and international demand for refined petroleum products, further establishing itself as a key player in the global energy market.