The Dangote Petroleum Refinery is set to receive up to 12 million barrels of crude oil from the United States by February 2025, according to a report by The Africa Report. This move has been prompted by local crude supply challenges hindering the refinery’s ability to operate at full capacity.
Refinery’s Push to Achieve Full Capacity
The $20 billion facility, located in Lekki, Lagos, aims to reach its full refining capacity of 650,000 barrels per day (bpd) by June 2025. However, current production has been ramped up to approximately 500,000bpd, falling short of the target due to insufficient crude oil supply from the Nigerian National Petroleum Company Limited (NNPC).
Challenges with Local Crude Oil Supply
The NNPC, which is responsible for providing 450,000bpd of crude for Nigeria’s local consumption, has struggled to supply 350,000bpd to the Dangote Refinery. This shortfall has compelled the refinery to seek alternative sources of crude from international markets. Officials emphasized that the daily feedstock required by the refinery cannot be entirely met by local production.
Naira-for-Crude Deal Still in Effect
Despite the supply challenges, the naira-for-crude arrangement introduced by President Bola Tinubu remains active. Under this initiative, crude oil is sold in naira to the Dangote Refinery, prioritizing petrol-producing refineries. With the imminent completion of the Port Harcourt and Warri refineries, the naira-for-crude deal may extend to additional facilities in the future.
Expanding Crude Storage Capacity
To address the unreliability of local crude supplies, the Dangote Refinery is constructing eight additional storage tanks. These new tanks will increase the refinery’s crude storage capacity by 41.67%, reaching 3.4 billion liters. The Vice President of Oil and Gas at Dangote Industries, Devakumar Edwin, explained that importing crude requires maintaining higher stockpiles to ensure uninterrupted production.
Future Crude Oil Demand
The Nigerian Upstream Petroleum Regulatory Commission estimates that the Dangote Refinery will need 550,000 barrels of a blend of Nigerian crude daily, translating to 17.05 million barrels monthly and 99.55 million barrels between January and June 2025. Meeting this demand is critical for achieving the refinery’s production goals.
Outlook for Nigeria’s Refining Industry
As the Dangote Refinery continues to ramp up production, it faces a dual challenge: overcoming local supply limitations and building infrastructure to support imported crude. The facility’s reliance on foreign crude may persist until domestic crude production and supply stabilize. Meanwhile, the revival of the Port Harcourt and Warri refineries could alleviate some of these challenges, enhancing Nigeria’s refining capacity in the coming months.
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