Lagos, Nigeria – In a significant milestone for Nigeria’s energy sector, the Dangote refinery, Africa’s largest oil refining facility, has officially commenced petrol production for the first time in 28 years.
This development marks a turning point for the nation, which has long struggled with fuel shortages and reliance on imported petrol.
The 650,000 barrels per day Dangote refinery, located in Lagos, has successfully completed its test production of petroleum and is set to begin selling petrol immediately.
This comes as a beacon of hope for Nigerians grappling with severe petrol scarcity across cities and towns.
According to sources close to the operation, all necessary parameters for certifying the refinery’s suitability have been met, signaling a promising start for the plant.
Aliko Dangote, Africa’s richest individual and the owner of the facility, has spearheaded this ambitious project, which represents a substantial investment in Nigeria’s oil industry.
For over two decades, Nigeria has expended billions of dollars on the maintenance of its four official refineries, yet has been unable to make them operational.
This has led to a continued reliance on imported petrol, costing the nation over $10 billion annually.
The Dangote refinery’s production is expected to save the country billions in foreign exchange and significantly improve the availability of this critical fuel.
Bloomberg has reported that the Dangote refinery is on the verge of producing substantial volumes of petrol, with full-scale production anticipated as early as this week.
The facility is designed to process 650,000 barrels of oil daily at full capacity, converting more than half of this into petrol.
This development is poised to have a transformative impact on both the local and global fuel markets. Nigeria, which imported almost 250,000 barrels of petrol daily last year, primarily from Europe, is expected to reduce its dependency on foreign supplies.
The refinery’s petrol output will play a crucial role in addressing the local market’s fuel shortages and supporting regional fuel markets.
Key to the refinery’s operations is a reformer unit, which produces blendstock for petrol. This unit has commenced operations, and petrol production is projected to begin by the end of the week.
At full capacity, the refinery is expected to produce approximately 330,000 barrels of petrol daily, contributing over 1 percent of the global demand for road fuel.
However, analysts from Energy Aspects Ltd. have noted that the full production capacity will take time to achieve.
The refinery is forecasted to produce about 90,000 barrels per day in the fourth quarter, increasing to nearly 250,000 barrels per day by the latter half of next year.
The ramp-up in production will depend on the successful operation of additional units, such as a residue fluid catalytic cracker.
The refinery’s gradual ramp-up follows years of delays. Aliko Dangote had initially aimed for a petrol production start in August. According to a spokesperson for Dangote, the project is progressing on track, despite previous setbacks.
Reuters has also confirmed that the refinery has begun processing petrol after overcoming recent crude shortages.
The $20 billion facility, which started operations in January with products including naphtha and jet fuel, is now set to reduce Nigeria’s costly reliance on imported oil products.
Devakumar Edwin, a vice president at Dangote Industries Limited, confirmed that petrol testing is underway and will soon be available in local markets.
The Nigerian National Petroleum Company Limited (NNPC), Nigeria’s primary importer of petrol, is expected to be the exclusive buyer of the refinery’s petrol output. Should domestic demand fall short, the refinery will consider exporting the surplus.
The advent of domestic petrol production comes at a crucial time for Nigeria. The NNPC has been struggling with a $6 billion debt to oil traders, which has hampered its ability to supply the local market. This has led to persistent fuel queues since July, exacerbating the country’s fuel crisis.
Clementine Wallop, Director for Sub-Saharan Africa at Horizon Engage, highlighted the critical timing of Dangote’s petrol production, given NNPC’s financial challenges.
Wallop emphasized the need for transparency in NNPC’s financial management and questioned how the company will manage procurement from Dangote’s refinery.
Despite being Africa’s largest oil producer, Nigeria has historically imported nearly all its fuel due to neglected national refineries. The commencement of production at the Dangote refinery represents a significant shift towards self-sufficiency in petrol.
In related news, a recent Reuters survey indicated that OPEC’s oil output fell in August to its lowest since January.
The survey attributed the drop to disruptions in Libyan supply and ongoing voluntary supply cuts by OPEC members. Despite these challenges, Nigeria’s increased oil output contributed to a slight rise in exports.
Libya, facing political instability, experienced the most significant supply loss last month, with output dropping by 290,000 barrels per day. This disruption has influenced global oil prices and raised the possibility of an OPEC+ output hike in October.
Overall, Nigeria’s new refinery promises to alleviate long-standing fuel shortages and reduce reliance on costly imports.
As production ramps up, the facility’s impact on the local and global fuel markets will be closely monitored, marking a pivotal moment in Nigeria’s energy sector transformation.
