After years of construction delays, Dangote Refinery has finally commenced full operations in January, 2024, according to reports by various news media and the Nigeria’s news agency.
Six Million Barrels of Oil Requirement
Prior to commencement, the company on December 8, 2023, said its plant received its maiden one million barrels of Agbami crude grade, from Shell International Trading and Shipping Company Limited (STASCO). In December 20, 2023, it also announced that it has received the second phase of its crude feedstock from NNPC. In December 29, 2023, Dangote received its third shipment of one million barrels of crude oil, feedstock from STASCO. In January 1, 2023, NNPC was reported to have supplied the Dangote Refinery with its fourth crude shipment.
In January 4, 2024, The Dangote Oil Refining Company confirmed that it has received the fifth crude oil shipment, of one million barrels of Bonny Light from the Nigerian National Petroleum Company (NNPC) Limited, and that it is preparing to take delivery of its sixth one million barrels of crude oil by the following week. Finally on Monday, 8 January 2024, Dangote Refinery received another 1 million barrels of Nigeria’s Agbami crude, thus, bringing total volumes so far received since December to 6 million barrels.
The company had said that it needed to receive 6 million barrels of crude, to its facility before commencement, in order to fully maximize its capacity. However, the refinery is not ruling out getting its crude supplies from countries other than Nigeria. as it was designed with capacity for processing of crude oil from three continents, Africa, Asia and America. The company is also eyeing supplying of its refined petroleum products to countries, other than Nigeria.
About Dangote Refinery
Dangote Refinery, is an oil refinery owned by Aliko Dangote, the chairman of Dangote Group, and Africa’s richest man for 12 years in a row, he was dethroned by South African business mogul, Johann Rupert, after Dangote’s wealth decreased from $13.5 billion in 2023, to $9.7 billion ($3.8billion loss) as at January 4, 2024. However, he has gone back to the number 1 position.
Dangote Group, built its huge wealth through investments in commercial and domestic grade sugar, salt, flour, cement, noodles, pastas among many other essential household needs.
Dangote Refinery, which is the group’s latest concern, sits on a 2,635 hectares of property (approx. 6,500 acres), at the Lekki Free Trade Zone, and is estimated to have gulped $19bn.
The refinery, which was initially scheduled to commence operations in 2021, was officially inaugurated by ex-president of Nigeria, Muhammadu Buhari, on 22nd of May 2023. The refinery’s commencement of operations was contingent upon its reception of six hundred barrels of crude, which it commenced receiving in December 2023.
Dangote Refinery, is expected to have the capacity to process about 650,000 barrels per day of crude oil, when in full capacity. This means that it is the largest single train refinery, in the world.
Dangote Petroleum Refinery, has been touted to have the capacity to meet 100 per cent of Nigeria’s requirement of all refined products, including petrol, diesel, kerosene, and aviation jet, and also has a surplus of each of these products for export. Available data reflects that Dangote refinery, have capacity to support 26,716 fuel filling stations, can create 100,000 direct and indirect jobs, and can provide a $21bn market for Nigeria’s crude oil annually.
The company said that “The refinery, was built to take crude through its two Single Point Moorings (SPMs), located 25 kilometers from the shore and to discharge petroleum products, through three separate SPMs. In addition, the refinery can load 2,900 trucks a day, at its truck-loading gantries.”
Dangote refinery, also has “a self-sufficient marine facility, with the ability to handle the largest vessel globally available. In addition, all products from the refinery will conform to Euro V specifications.”
The refinery, which is the biggest in the world, is “designed to comply with US EPA, European emission norms, and Nigeria’s emission/effluent norms, as well as African Refiners and Distribution Association (ARDA) standards.” According to the company.
Managing Director of Dangote Ports Operations, Mr. Akin Omole, explains that “Once the 6 million barrels are fully delivered…, it will facilitate the initial run of the refinery as well as kick-start the production of diesel, aviation fuel, and LPG, before subsequently progressing to the production of Premium Motor Spirit (PMS).” The company said recently.
Expectations of Nigerians from Dangote Refinery
The hopes raised by the establishment of Dangote Refinery, is enormous. Coming from a background of oil racketeering, abandoned and moribund Nigerian-owned refineries, and the corruption-riddled and decades-long practice of importation of finished petroleum products, by the Federal Government of Nigeria, coupled with the scandalous period of fuel-subsidy regime, initially designed to cushion the effects of high cost of petroleum products, and attendant high cost of living, though hijacked by a powerful cabal of oil racketeers in corridors of power, Nigerians have their hopes raised to high heavens by the establishment of Dangote Refinery.
This hope is anchored on the promises and potential that Dangote refinery habour. Many Nigerians believe that the established Dangote refinery, will finally put an end to the long era of fuel importation, stabilize fuel price fluctuations, end perennial long fuel queues, possible lower the cost of fuel pump prices, since fuel is now being refined locally, and kill age old fuel racketeering among many others. But how realistic can these expectations be fulfilled by Dangote Refinery?
The government, does not appear positive that many of these expectations will come to pass. For starters, Ajuri Ngelale, the Senior Special Assistant to President Bola Ahmed Tinubu on Public Affairs, had said that “More refineries in Nigeria will not lead to lower fuel prices.” What this means is that Nigerians are stuck with the unbearably high cost of fuel pump prices, with its spill-over effect of high cost of, well everything else. High cost of fuel pump price, has always triggered high cost of transportation, prices of goods and services and even cost of property rental. In Nigeria, a country that is heavily dependent on fuel for its revenues, due to near collapse of other economic sectors, everything rises with the rise of fuel pump price.
Again, with Dangote Refinery eyeing foreign markets, like the United States, it begs the question if indeed the refinery will put Nigerians as primary consideration, over earning huge foreign exchange by selling its refined products to countries willing to pay more than what Nigerians would pay. It’s important to note that, Dangote did not fully finance its refinery. Most big businesses never do. In this case, Dangote has financing partners such as banks, and other investors, whose primary consideration is return of investment (ROI), rather than bringing down the cost of fuel pump prize to benefit Nigerians. What this simply means is that Nigerians should lower their expectations, in terms of the possibility of buying petroleum products at a lower cost, due to the establishment of Dangote Refinery. In fact, the cost of petroleum products could go higher. Everyone knows that in Nigeria, whatever goes up never comes down.
If indeed, Dangote Refinery functions at full capacity and it intends to, Nigeria should expect 650,000 barrels, which is more than what the country can consume. This is feasible only where the need for profits, is modulated by the need to create a balance in the prices of goods and services, for the common people of Nigeria.
Indeed, putting too much economic power in the hand one individual, is never a good social development strategy. As we know, power have the tendency to corrupt those who wield it.
Dangote Refinery, has the capacity to change the age long corruption that have characterized the oil industry in Nigeria. But, this can only be possible if the government is responsible enough to put in checks and balances, to its operations and also add some form of buffers in terms of reviving Nigerian owned refineries, and allow small players to actively participate in the highly lucrative oil sector. This can come by way of giving the go ahead to smaller players to operate, alongside the big players like Dangote.
