The president of the Dangote Group, Aliko Dangote has boasted that the quality of Dangote Refinery’s Premium Motor Spirit will match that of the United States, and other parts of the world.
Dangote said this on Tuesday during a press conference to announce the official petrol production at the 650,000 barrels per day facility.
“Our quality will match what they have in the United States, and other parts of the world,” he said.
While addressing the press, Dangote displayed a “clean” petrol in a bottle, adding that, “the quality will make your engines last longer,” He added that the refinery will meet the needs of Sub-Saharan Africa.
Dangote took time to acknowledge the contributions of the Federal government, his members of staff and Nigerians for their support.
With this development, Dangote has successfully met all the required parameters to certify the suitability of its refining operations. This is expected to save Nigeria billions of dollars in foreign exchange and boost the local availability of petrol, a critical fuel used by businesses and households across the country.
Despite spending billions on turnaround maintenance over the past two decades, Nigeria’s four official refineries have remained non-functional. As a result, the country has been importing nearly all of the 66 million litres of petrol it consumes daily, at an estimated annual cost exceeding $10 billion.
The refinery, located near Lagos, will eventually process 650,000 barrels of oil per day when operating at full capacity, with more than half of that output being petrol. At peak production, the refinery is expected to produce around 330,000 barrels of petrol per day, contributing over one per cent to global demand, estimated at 27 million barrels daily.
However, these production levels will not be immediate. Consultancy firm Energy Aspects Ltd. forecasts that the refinery will produce about 90,000 barrels per day of petrol in the fourth quarter, ramping up to nearly 250,000 barrels per day in the latter half of next year. The increase in output will depend on the activation of another key unit within the refinery.
The refinery has been gradually ramping up operations after years of delays. Aliko Dangote previously indicated that petrol production was targeted to begin in August.
A spokesperson for Dangote confirmed to Bloomberg that the refinery is “on track” to meet its production goals. Similarly, Reuters reported that the refinery had started processing petrol after recent crude shortages caused delays. According to Devakumar Edwin, Vice President at Dangote Industries Limited, the Nigerian National Petroleum Company Limited will be the sole buyer of the refinery’s petrol.
“If no one is buying it, we will export it as we have been exporting our aviation jet fuel and diesel,” Edwin stated, without specifying when the petrol would be available on the local market.
The commencement of petrol production at the Dangote Refinery is expected to ease the NNPC’s struggles to supply the local market, particularly as the company faces debts totaling $6 billion to oil traders, which have hampered its ability to maintain fuel supplies since July.
“The news that Dangote is processing gasoline couldn’t come at a more crucial time given NNPC’s statement about its difficulties securing imported supply due to financial strain,” noted Clementine Wallop, Director for Sub-Saharan Africa at political risk consultancy Horizon Engage. She emphasized the need for greater transparency in NNPC’s finances, especially in light of its purchasing commitments with Dangote.
Meanwhile, a recent survey by Reuters indicated that OPEC’s oil output fell to its lowest level since January, despite a small increase in Nigeria’s production. OPEC pumped 26.36 million barrels per day last month, down 340,000 barrels per day from July, largely due to unrest in Libya and ongoing voluntary supply cuts by other OPEC+ members.
The commencement of petrol production at the Dangote Refinery is set to significantly impact Nigeria’s fuel market, providing much-needed relief from the ongoing scarcity while also influencing global fuel trade.
