The Dangote Petroleum Refinery is set to increase its production capacity to 650,000 barrels per day (BPD) by June 2025, but with crude oil supply from the Nigerian National Petroleum Company Limited (NNPC) proving insufficient, the facility is now looking beyond domestic sources to meet its production needs.
Currently operating at 500,000 BPD, the $20 billion refinery, located in Lekki, Lagos, faces supply challenges as NNPC struggles to provide 350,000 BPD out of the 450,000 BPD allocated for local refining. Given these constraints, refinery officials have confirmed that crude imports will be necessary to sustain and expand operations.
A source at the facility explained that while NNPC continues to supply crude, the refinery’s daily requirements exceed what the state-owned oil company can provide. Another insider affirmed that sourcing crude internationally is inevitable, given the refinery’s massive scale.
“This is a 650,000 BPD refinery, and as we ramp up production, we must ensure a steady supply of crude. By mid-year, we aim to hit full capacity, and meeting that demand requires sourcing crude oil wherever available,” an official stated.
Global Impact and Storage Expansion
A consultant to the refinery highlighted the global significance of the Dangote Refinery, noting that its operations are already impacting fuel markets in Europe. “Refineries of this scale are rare, even across Europe. The international market is feeling our presence,” he said.
To accommodate increased crude imports, the refinery is constructing eight additional storage tanks, boosting crude storage capacity by 41.67% to 3.4 billion litres. According to Devakumar Edwin, Vice President of Oil and Gas at Dangote Industries, the expansion is necessary due to unreliable crude supply from NNPC.
“Importing crude means we need larger stockpiles. We’re building eight more tanks, with four nearing completion, to hold an additional one billion litres of crude oil,” Edwin stated.
Naira-for-Crude Policy and Refinery Demand
In a bid to boost domestic refining, the Federal Government introduced the naira-for-crude policy in 2023, allowing local refineries to purchase crude oil in naira instead of US dollars. Dangote Refinery was the first facility to benefit from this initiative, with NNPC expected to supply 385,000 BPD under the arrangement. However, industry insiders suggest that actual deliveries have fallen short, forcing the refinery to seek alternative sources.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) recently disclosed that with more refineries coming online, including Port Harcourt, Warri, and Kaduna, the 450,000 BPD allocated for local refineries will be insufficient. The total refining demand from eight operational refineries now stands at 770,500 BPD, further straining domestic supply.
Future Outlook and Policy Review
The government plans to review the naira-for-crude initiative in April 2025 to assess its effectiveness. With growing refining capacity and increasing crude demand, industry analysts predict that local refineries may have to rely more on crude imports to sustain operations.
As the Dangote Refinery approaches full capacity, its success is expected to reshape Nigeria’s fuel market, reducing dependence on imports while positioning the country as a major supplier of refined petroleum products in Africa and beyond.
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