Dangote Petroleum Refinery, with a capacity of 650,000 barrels per day, is capitalizing on cost-effective oil imports from the United States, utilizing them for up to a third of its feedstock as it commences production.
According to a report from Bloomberg, the refinery has commenced product shipments in recent weeks while preparing two units to facilitate gasoline production. This development is expected to significantly impact the fuel market in Nigeria and the surrounding region, as highlighted by industry analysts.
Alan Gelder, Vice President of Refining, Chemicals, and Oil Markets at Wood Mackenzie consultancy, commented, “Dangote is poised to influence Atlantic Basin gasoline markets this summer and beyond.” He emphasized the potential disruption when the Residue Fluid Catalytic Cracking (RFCC) unit becomes operational, as it will recalibrate the West African gasoline supply dynamics by upgrading heavier products.
The refinery is currently operating at approximately 300,000 barrels per day, close to half of its designated capacity, as estimated by analysts from WoodMac, FGE, and Citac. It has commenced shipments of jet fuel, gasoil, and naphtha, broadening its product portfolio.
Wood Mackenzie anticipates the gasoline-centric units to become operational this summer, while other experts project the RFCC to be fully operational by the year’s end. Dangote Industries recently announced that gasoline deliveries are set to commence in May, although the company has yet to respond to inquiries regarding this matter.
Ronan Hodgson, an energy analyst at FGE, remarked, “Even at its current operational capacity, the refinery is already making a significant impact on product markets.” Additionally, units aimed at enhancing diesel quality are scheduled to commence operations in the upcoming months.
On Wednesday, The PUNCH reported that Dangote Refinery announced a reduction in diesel prices from N1,200/litre to N1,000/litre, sparking excitement among downstream oil sector players.
According to a statement from the refinery’s spokesperson, Tony Chiejina, “Dangote Petroleum Refinery has taken an unprecedented step by further reducing the price of diesel from N1,200 to N1,000/litre.”
Chiejina highlighted the refinery’s previous supply of diesel at N1,200/litre three weeks ago, representing a substantial 30% reduction from the previous market price of about N1,600/litre.
He added, “This significant reduction in diesel prices at Dangote Petroleum Refinery is expected to have a positive impact across all sectors of the economy and ultimately contribute to lowering the country’s high inflation rate.”
According to Bloomberg, approximately one-third of the oil supplied to the refinery has been US-grade WTI Midland. This trend may continue as long as foreign oil remains more affordable than local supplies, although Dangote could potentially alter this dynamic.
Earlier this week, Nigeria introduced new regulations requiring domestic oil producers to sell crude to local refineries, aiming to reduce the country’s dependence on imported refined products. However, it remains unclear how much crude each refinery will need to purchase.
In addition to this directive, the Federal Government announced that refineries could now acquire crude using either the local currency, the naira, or the United States dollar.
