The Dangote Refinery has officially been commissioned by Nigerian President Muhammadu Buhari, paving the way for a reduction in fuel imports and stabilized supply.
With a capacity to produce up to 650,000 barrels per day (bpd), the refinery serves as the largest on the continent and is expected to commence operations through a phased approach starting in June 2023, with first product hitting the market as early as July. The refinery will reach between 50 and 70% capacity at the end of this year, running at full capacity by 2025.
Built by Nigerian businessman Aliko Dangote at a cost of $19 billion, the refinery complex comprises a 435MW power station, deep seaport and fertilizer unit and is expected to fulfil 100% of the country’s demand while creating a market for $21 billion per annum of Nigerian crude.
Speaking during the commissioning ceremony President Buhari said the refinery was a significant milestone for Nigeria’s economy and a game changer for the downstream petroleum market in Africa.
“This mega industry we are commissioning today is a clear example of what can be achieved when entrepreneurs are encouraged and supported and when an enabling environment is created for investment and for businesses to thrive,” he noted.
Dangote added that the refinery will “enable us to meet not only our country’s demand but also to become a player in Africa’s and the global market.
Our first call is to ramp up production to ensure that this year we are able to fully satisfy our nation’s demand for higher-quality products to enable us to eliminate the tragedy of import dependency and stop once and for all the dumping in our market of toxic, substandard petrol products.”
An agreement is already in place with the state-owned Nigerian National Petroleum Corporation (NNPC) – which holds a 20% stake in the refinery – for the supply of 300,000 bpd of crude to the refinery, sourced via production sharing agreements held between the NNPC and majors to the likes of ExxonMobil, Shell and Eni.
Despite supply concerns due to declines in legacy fields and challenges associated with oil theft, a recent political drive to attract new E&P investment and improve asset security is set to improve production.
For a country that heavily relies on petroleum imports to sustain its economy, the Dangote Refinery is set to play a major role in alleviating fuel shortages, reducing petroleum costs while positioning Nigeria as a regional refining hub.
“To achieve the goals of Agenda 2063, Africa must come together – we must integrate our economies, eliminate trade barriers and energize our youthful population to scale up our production capacity. We must create necessary conditions for our private sector to grow and partner with the public sector to accelerate economic growth across the continent,” President Buhari concluded.