The Dangote Petroleum Refinery will need about N1.7 trillion worth of crude oil every month, following a directive from President Bola Tinubu. The President has ordered the Nigerian National Petroleum Company Limited (NNPC) to sell crude to the Dangote refinery and other domestic refineries in naira.
Bayo Onanuga, the President’s Special Adviser on Information and Publicity, announced this directive on Monday through his official X (formerly Twitter) account. He explained that the Federal Executive Council adopted this measure to stabilize the pump price of refined fuel and the dollar-naira exchange rate.
An analysis of industry reports shows that the $20 billion Dangote refinery in Lekki, Lagos, will consume about N1.7 trillion of crude oil monthly if the NNPC follows the President’s mandate. The average cost of crude in 2024 is projected to be around $83 per barrel, based on data from Statistica, a global statistical firm.
Alhaji Aliko Dangote, President of Dangote Industries, stated that the refinery would reach a capacity of 500,000 barrels per day (bpd) in August, increasing to 550,000 bpd by December 2024. This means the refinery aims to process 500,000 bpd of crude oil from August to November, before hitting the 550,000 bpd mark in December.
With a refining capacity of 500,000 bpd and an average crude price of $83 per barrel, the refinery would require about $41.5 million worth of crude oil daily, which translates to approximately N56.55 billion per day using the average exchange rate of N1,362.6 per dollar in 2024. This means the refinery will need around N1.7 trillion worth of crude oil each month.
Chief Ukadike Chinedu, the National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria, stressed the importance of the NNPC meeting this demand despite challenges in ramping up crude oil production. “It is an order by the President that crude be sold to domestic refineries in naira, including the Dangote refinery. We know that the refinery is massive and requires over 500,000 barrels of crude oil daily, so NNPC and its partners should work harder to meet this demand,” Chinedu said.
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Eche Idoko, the Publicity Secretary of the Crude Oil Refiners Association of Nigeria, highlighted the benefits of selling crude to local refineries in naira. “The sheer fact that the crude will be sold in naira will give the naira a lot of leverage against the dollar, and by implication, the naira will appreciate against the dollar. Automatically, when there are fewer naira chasing the dollar, it will affect the price. It means the cost of refining will drop and this will affect the pump price. We will see a rebound in the pricing of fuel once the President’s order is implemented,” Idoko stated.
During a recent tour of the refinery, Aliko Dangote revealed that the refinery is fully operational and expects to generate over $26 billion annually. He explained that the refinery completed its trial run in January 2024 and began steady state production in March 2024. The facility aims to reach a production capacity of 500,000 bpd by August, 550,000 bpd by the end of the year, and 650,000 bpd by the first quarter of 2025. Gasoline production is set to start in July, with sales beginning in August.
The refinery has dedicated loading gantries with 86 loading bays, marine facilities for crude oil offloading and petroleum product loading, and a total storage capacity of 4.5 billion liters, which can cover 20 days of crude requirement and 15 days of Nigeria’s petrol consumption. “The Dangote refinery can meet Nigeria’s requirements and have a surplus for exports,” Dangote stated.
In a related development, the NNPC announced its goal to increase crude oil production to two million barrels per day by the end of the year. The country’s daily production rose from 1.27 million barrels in June to 1.6 million in July, according to the Nigerian Upstream Petroleum Regulatory Commission.
Speaking during a meeting with maritime stakeholders at the Nigerian Navy Headquarters, NNPC Group Managing Director Mele Kyari expressed confidence in achieving this target. “NNPC is fully committed to increasing crude oil production to meet domestic demand and support export,” Kyari said.