The Dangote Petroleum Refinery will require approximately N1.7 trillion worth of crude oil each month following President Bola Tinubu’s directive for the Nigerian National Petroleum Company Limited (NNPC) to sell crude to the refinery and other domestic refineries in naira.
This directive, announced on Monday, aims to stabilize the pump price of refined fuel and the dollar-naira exchange rate. Bayo Onanuga, the Special Adviser to the President on Information and Publicity, confirmed this decision via a post on his official X handle, noting that the Federal Executive Council had adopted the measure.
An analysis of industry reports indicates that the $20 billion Dangote refinery in Lekki, Lagos, will require about N1.7 trillion in crude oil monthly to meet the President’s mandate. With crude oil prices averaging $83 per barrel in 2024, the refinery will need approximately $41.5 million worth of crude oil daily, translating to N56.55 billion using the average exchange rate of N1,362.6/$.
The refinery, led by President Dangote Industries, Alhaji Aliko Dangote, is set to achieve a capacity of 500,000 barrels per day (bpd) in August and 550,000 bpd by December 2024. This means that between August and November, the refinery aims to refine 500,000 bpd before increasing to 550,000 bpd in December.
Industry Reactions
Chief Ukadike Chinedu, National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria, emphasized the importance of meeting the President’s order despite challenges in ramping up crude oil production. “NNPC and its partners should work harder to meet this demand,” he stated, highlighting the need for increased production.
Eche Idoko, Publicity Secretary of the Crude Oil Refiners Association of Nigeria, pointed out the potential economic benefits of selling crude in naira. “This will give the naira a lot of leverage against the dollar, reducing the cost of refining and impacting the pump price positively,” he explained.
Dangote Refinery Operations
During a recent tour, Dangote outlined the refinery’s current operations and future projections. The refinery has already completed a trial run and commenced steady-state production in March 2024. It aims to reach a production capacity of 500,000 bpd by August 2024, 550,000 bpd by December 2024, and 650,000 bpd by the first quarter of 2025. Annual revenue is expected to exceed $26 billion.
The refinery boasts dedicated loading gantries with 86 loading bays, marine facilities for crude offtake and petroleum product loading, a 900-kilotonne per annum polypropylene plant, and a total storage capacity of 4.5 billion liters. This capacity can cover 20 days of crude requirement and 15 days of Nigeria’s petrol consumption, producing 53 million liters of petrol and 1.1 million tonnes daily.
NNPC’s Production Goals
In related news, the NNPC announced its goal to increase crude oil production to two million barrels per day by the end of the year. The country’s daily production has already risen from 1.27 million barrels in June to 1.6 million in July, according to the Nigerian Upstream Petroleum Regulatory Commission.
NNPC’s Group Managing Director, Mele Kyari, expressed optimism about meeting this target during a meeting with Maritime Stakeholders at the Nigerian Navy Headquarters. He emphasized NNPC’s commitment to achieving these production goals to meet both domestic and export demands.
This move is expected to significantly impact Nigeria’s economy, enhancing fuel availability and stabilizing the currency exchange rate while addressing long-standing energy challenges.
