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Dangote Refinery Set to Achieve its Target by Mid-2025 Despite Crude Supply Challenges

Published by admin on January 19th, 2025.

Dangote Refinery Set to Achieve its Target by Mid-2025 Despite Crude Supply Challenges

The $20 billion Dangote Refinery is on track to reach its full refining capacity of 650,000 barrels per day (bpd) within the next few months, marking a significant milestone in its operations.

• Dangote refinery aims to achieve 650,000bpd capacity by June 2025. • Plans are in place to address the local crude supply gap by sourcing oil from abroad. • Issues with NNPC have delayed the production of premium motor spirit (petrol).

Officials from the Dangote refinery revealed that the facility is currently refining 500,000 barrels per day but is expected to hit its target of 650,000bpd by mid-2025. One of the key challenges facing the refinery in achieving this goal has been a shortage of locally sourced crude, which is set to be addressed through imports.

The refinery is making arrangements to bring in crude oil from outside Nigeria, as the supply from domestic sources has not been sufficient. If this plan moves forward, the refinery is expected to ramp up production to its targeted capacity.

Sources close to the refinery, who spoke confidentially, confirmed that while the Naira-for-crude agreement remains in place, additional crude oil from international markets will be necessary to meet the target. Currently, the Nigerian National Petroleum Corporation (NNPC) provides between 350,000bpd and 450,000bpd of crude to the Dangote refinery.

As one insider explained, “It’s not that NNPC is incapable of meeting the refinery’s needs, but when you consider our 650,000bpd target, we need more crude than we’re getting.”

The Dangote refinery’s original plans to impact the Nigerian oil market were delayed last year due to a dispute with the NNPC over the availability and pricing of local crude. The refinery alleged that the NNPC either sold crude at inflated prices or failed to provide sufficient supply.

This forced Dangote to source crude from international markets, including suppliers from Brazil and the United States, at a much higher cost. To mitigate these challenges, Dangote accelerated plans to begin crude production at its upstream projects in the Niger Delta, with an initial production of around 20,000bpd expected to increase in early 2025.

In addition, the federal government introduced a new initiative on October 1, 2024, which mandates that crude oil be sold to Dangote and other refineries in Nigeria in exchange for refined products like petrol and diesel, with transactions conducted in the local currency, the naira.

Finance Minister Wale Edun confirmed the launch of this Naira-for-crude program in a statement on October 5, 2024, aiming to boost local refining capabilities and stabilize the domestic oil market.