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| For the First Time in 28 Years, Nigeria Begins Petrol Production at Dangote Refinery |
Nigeria has commenced petrol production for the first time in 28 years. THISDAY learned yesterday that the 650,000 barrels per day Dangote Refinery in Lagos has completed test production and will begin sales immediately.
This development is expected to bring much-needed relief to Nigerians currently facing severe petrol scarcity across the country.
It was reported that all the necessary parameters for certifying the refinery's suitability have been satisfactorily met by the facility owned by Africa’s richest person, Aliko Dangote.
Despite spending billions of dollars on turnaround maintenance of its four official refineries over the past two decades, Nigeria has been unable to get them operational.
Nigeria, which consumes about 66 million litres of petrol daily, currently spends a significant portion of its budget—exceeding $10 billion annually—on importing fuel.
The new development is expected to save the country billions of dollars in foreign exchange and improve the local availability of this critical fuel, heavily used by businesses and homes.
Africa’s largest oil refining facility is on the brink of producing significant volumes of petrol, which could be available as early as this week, Bloomberg reported yesterday.
Describing it as a landmark moment with the potential to transform the global fuel market, the report quoted two sources stating that product testing has started in earnest.
The new facility near Lagos is set to produce large amounts of fuel and will be able to process 650,000 barrels of oil per day at full capacity, converting more than half of that into petrol.
This ramp-up is likely to be welcomed within Nigeria, given that the state oil company—Nigeria’s main fuel importer—has reported disruptions in its ability to supply gasoline due to debt and rising prices, Bloomberg stressed.
Dangote’s production is expected to impact billions of dollars in regional and global fuel markets, as Nigeria remains a significant consumer, receiving almost 250,000 barrels per day in shipments last year, mostly from Europe, according to data from analytics firm Vortexa Ltd.
Key to the plant’s petrol output is a unit called a reformer, which produces blendstock for road fuel. This unit has started operating, with petrol production expected to begin by the end of the week, according to sources. Another source indicated that petrol would be rolled out this week.
At full capacity, the refinery is expected to produce about 330,000 barrels of petrol per day, according to Randy Hurburun, senior refinery analyst at consultancy Energy Aspects Ltd. This represents more than 1% of global demand for road fuel, which is about 27 million barrels per day.
However, these volumes are still a long way off, with Energy Aspects forecasting about 90,000 barrels per day of production in the fourth quarter, increasing to almost 250,000 in the second half of next year. Key to raising output further is another unit called a residue fluid catalytic cracker.
The refinery has been gradually ramping up after years of delays. The plant’s owner, Aliko Dangote, said in July that the plant aimed to start petrol production in August.
In response to questions about the various steps involved in ramping up gasoline output, a spokesman for Dangote told Bloomberg, “we are on track.”
Similarly, a Reuters report stated yesterday that the refinery had begun processing petrol after delays caused by recent crude shortages, quoting an executive of the company.
The $20 billion refinery began operations in January, producing products including naphtha and jet fuel. The refinery promises to ease Nigeria’s costly reliance on imported oil products.
“We are testing the product (petrol) and subsequently it will start flowing into the product tanks,” said Devakumar Edwin, a vice president at Dangote Industries Limited. He did not specify exactly when the petrol would hit the local market.
Edwin said the Nigerian National Petroleum Company Limited (NNPC), Nigeria’s sole importer of petrol, would buy the product exclusively.
“If no one is buying it, we will export it as we have been exporting our aviation jet fuel and diesel,” Edwin said.
The delivery of petrol into the Nigerian market will ease NNPC’s struggle to supply the local market. The company is dealing with debts of $6 billion to oil traders for supply since January, Reuters reported.
This has affected its ability to supply the local market, where fuel queues have persisted since July.
“The news that Dangote is processing gasoline (petrol) couldn’t come at a more crucial time given NNPC’s statement about its difficulties securing imported supply due to financial strain,” said Clementine Wallop, Director, Sub-Saharan Africa at political risk consultancy Horizon Engage.
She added that this “prompts the question of how NNPC will manage purchasing from Dangote, and highlights the need for greater transparency in its finances.”
Nigeria is Africa’s top oil producer, yet it imports almost all its fuel due to years of neglect of its national refineries.
Meanwhile, a Reuters survey indicated that the Organisation of Petroleum Exporting Countries (OPEC) oil output fell in August to its lowest since January, as unrest disrupting Libyan supply added to the impact of ongoing voluntary supply cuts by other members and the wider OPEC+ alliance.
Among countries posting higher output, there was a small increase in Nigeria, which boosted exports, the survey found.
OPEC pumped 26.36 million barrels per day last month, down 340,000 bpd from July, the survey found. This was the lowest total since January 2024, according to the survey.
A drop in Libyan exports and production amid a standoff between political factions over control of the central bank has helped boost oil prices and, sources say, increased the prospect that OPEC+ will proceed with a planned output hike from October.
Libya provided the largest supply loss last month of 290,000 bpd, the survey found. Output was disrupted at the Sharara field early in the month and at more fields towards the end, trimming output to an average of 900,000 bpd, the survey found.
Some flows data, such as that of Kpler, showed little impact on Libyan exports in August, although sources in the survey estimated the production impact to be more significant.
Libya is exempt from OPEC+ agreements to limit production. Other declines came from Iraq, which lowered exports in August according to the survey and is seeking to boost compliance with its OPEC target, and from Iran, which is also exempt.
Iran has been boosting exports in the last few years despite US sanctions remaining in place and is still pumping close to the highest levels since 2018.
OPEC pumped about 220,000 bpd more than the implied target for the nine members covered by supply cut agreements, with Iraq still accounting for the bulk of the excess, the survey found.
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