Dangote Industries Ltd. expects its 650,000-barrel-per-day refinery—the largest in Africa—to rely entirely on Nigerian crude oil by the end of 2025, potentially displacing hundreds of thousands of barrels of imported crude daily.
This is according to a new report by Bloomberg.
According to Bloomberg, the refinery received about half of its crude in June from local producers who will be able to sell more to the facility as their foreign supply obligations end.
“We expect some of the long-term contracts will expire,” vice president at Dangote Industries, Devakumar Edwin said in an interview last week at the sprawling site. “Personally, and as a company, we expect that before the end of the year we can transition 100% to local crude.”
Dangote sold the idea of the massive plant as a way for Nigeria, the top oil producer on the continent, to stop sending barrels to Europe only to be refined and shipped back as costly imports — a process rife with corruption.
The gradual ramp-up of the refinery has already made Nigeria a net exporter of petroleum products, with room to go before reaching capacity. Still, the effort required large quantities of overseas crude after domestic traders failed to meet demand.
Nigeria has seen a withdrawal of oil majors from onshore and shallow water fields that have been taken over by local companies with fewer resources.
Meanwhile, supply contracts with foreign companies, crude theft and attacks on pipelines in the Niger Delta have curbed production reducing the availability of oil at home.
Dangote Refinery currently processes 550,000 barrels of crude a day
Since the Dangote facility opened, the company has bought crude from Brazil, Angola, Ghana and Equatorial Guinea, according to Edwin. Improved relations between the refinery, local oil traders and the government will result in a steady supply of Nigerian crude, he said.
That still requires a significant increase of local oil over the coming months. In June, the refinery sourced 53% of its crude supply from domestic producers and 47% from the US, according to Bloomberg.
The plant is currently processing 550,000 barrels of crude a day, according to Edwin.
Dangote was scheduled to take five cargoes from Nigeria’s state oil company in July, the same amount that it’s due to take up in August, according to a list of cargo allocations. Each shipment holds almost a million barrels of crude.
What you should know
In May 2023, Africa’s largest oil refinery, the Dangote Refinery, was commissioned in Nigeria, with hopes that it would help alleviate the country’s chronic fuel shortages.
During a recent high-level visit to the state-of-the-art facility, which has a processing capacity of 650,000 barrels per day, President of the ECOWAS Commission, H.E. Dr. Omar Alieu Touray, described the refinery as a beacon of hope for Africa’s future and a powerful testament to the potential of the private sector in driving regional industrialisation.
