The Dangote Refinery in Nigeria is set to receive 12 million barrels of crude oil from the US as it struggles to secure sufficient domestic supply. This development comes just weeks after The Africa Report revealed that the world’s largest single-train refinery is ramping up its crude storage capacity by 1 billion litres (approximately 6.29 million barrels) to stockpile more imported feedstock.
Once completed, this expansion will increase the refinery’s total crude storage capacity to 3.4 billion litres. “About 12 million barrels of crude have departed the US and should arrive in Nigeria by February,” an insider tells The Africa Report.
The source added that the shipment aligns with Dangote Refinery’s plans to scale up refining operations from the current 500,000 barrels per day (bpd) to its full capacity of 650,000bpd by the next quarter.
Local hurdles persist
Aliko Dangote, Africa’s wealthiest man, has publicly voiced frustration over the difficulties in sourcing adequate feedstock from Nigeria for his $20bn refinery.
Despite directives from President Bola Tinubu instructing the state-owned Nigerian National Petroleum Company (NNPC) to supply the refinery with crude oil, the firm has struggled to meet demand. Other oil majors operating in Nigeria have also been unable to provide sufficient supply, directing the refinery to buy from middlemen who often charge premium rates.
Nigeria recently claimed increased oil production of 1.8 million bpd, a figure that includes condensate output. However, OPEC data from December indicates that crude oil production (excluding condensates) stood at 1.48 million bpd, just below the country’s 1.5 million bpd OPEC quota, which is in effect until 2026.
“Dangote has to feed his refinery with crude at a good price because he cannot be exposed to the vagaries of the crude oil of Nigeria where statistics are exaggerated,” said Dan Kunle, a veteran adviser in Nigeria’s oil and gas sector with more than 35 years of experience.
Tinubu’s administration projects crude oil production to reach 2.06 million bpd by 2025, with an assumed price of $75 per barrel, according to the latest national budget.
His government is also projecting an average exchange rate of N1,500 to the US dollar based on the expectation that Nigeria will soon stop importing crude and refined petroleum products.
(The Africa Report)
