The Dangote Petroleum Refinery is set to receive a massive shipment of 12 million barrels of crude oil from the United States as it grapples with inadequate local supply, according to a report by The Africa Report on Monday.
The $20 billion state-of-the-art refinery, located in Lekki, Lagos State, has turned to international crude markets to maintain its operations and work toward its ambitious goal of processing 650,000 barrels per day (bpd) by mid-2025. Currently operating at approximately 500,000 bpd, the refinery has struggled to secure sufficient feedstock from the Nigerian National Petroleum Company Limited (NNPC), which has only managed to provide 350,000 bpd from its allocation of 450,000 bpd designated for local refining.
Sources revealed that the shipment of 12 million barrels of crude oil has already left the United States and is expected to arrive in Nigeria by February. This shipment will bolster the refinery’s crude stockpile and ensure uninterrupted production as it ramps up operations.
“Currently, we are producing 500,000 barrels per day. To reach 650,000 bpd by June this year, we must source crude oil from wherever it is available,” an official at the refinery stated.
Naira-for-Crude Policy in Play
The Dangote Refinery is the primary beneficiary of the federal government’s naira-for-crude policy, introduced by President Bola Tinubu in 2023 to encourage local refinery operations. However, despite this arrangement, the NNPC’s inability to fully meet the refinery’s daily crude requirements has pushed the facility to import oil to sustain its output.
President Tinubu’s directive also extends to other functional refineries in the country, with plans to include the Port Harcourt and Warri refineries once they become operational.
Expansion to Address Storage Needs
To accommodate increasing import volumes, the Dangote Refinery is constructing eight additional crude storage tanks. These tanks will increase the facility’s storage capacity by 41.67%, bringing the total to 3.4 billion liters.
“Importing crude from other countries instead of relying solely on local supply means we need higher crude stockpiles to ensure production stability,” Devakumar Edwin, Vice President of Oil and Gas at Dangote Industries, explained.
Long-Term Supply Strategy
In a bid to stabilize feedstock supply, the refinery previously issued a term tender to purchase two million barrels of West Texas Intermediate (WTI) Midland crude monthly, totaling 24 million barrels for a year beginning in July 2024.
The Dangote Refinery, Africa’s largest refinery, currently supplies petrol, diesel, and aviation fuel to Nigeria and neighboring countries. Officials are optimistic that with strategic imports and improved local sourcing, the facility will meet its production target and reduce Nigeria’s dependence on imported refined petroleum products.
As Nigeria works to achieve energy independence, the challenges faced by the Dangote Refinery highlight the broader need for structural improvements in local crude production and supply chains.
