In a strategic move that would transform Nigeria’s energy sector, Africa’s largest petrochemical refinery, the $20.5-billion Dangote Oil Refinery, owned by Africa’s wealthiest individual, Aliko Dangote, is increasing production by leveraging US crude oil.
According to Bloomberg, the Dangote Oil Refinery, which has a capacity of 650,000 barrels per day, will source up to one-third of its feedstock from US oil imports once it begins operations. This decision not only reinforces the refinery’s strategic goal, but also demonstrates its ability to respond to global market trends.
According to industry experts, the refinery’s gasoline production will be a game changer not only for Nigeria, but also for the rest of West Africa. Alan Gelder, vice president of refining, chemicals, and oil markets at Wood Mackenzie, expects a significant influence on the industry, particularly with the introduction of the residue fluid catalytic cracking unit (RFCC), which promises to improve product quality.
However, recent reforms in Nigeria’s energy policy could change this dynamic. New restrictions require domestic oil producers to apportion crude supply to local refineries, with the goal of reducing reliance on imported refined goods. While the specifics of this mandate are unclear, it has the potential to transform the dynamics of Nigeria’s energy sector.
The Dangote Petrochemical Complex, built on a peninsula on the outskirts of Lagos, represents a huge step forward in industrial development. Along with its refinery capabilities, it houses a polypropylene facility that produces 1 million metric tonnes per year, as well as two of the largest fertilizer trains, each capable of generating 3 million tonnes of urea per year.
Despite now running at around 300,000 barrels per day, or nearly half of its original capacity, the refinery has already begun delivering jet fuel, gasoil, and naphtha, with intentions to extend its product range soon. Wood Mackenzie expects the gasoline-focused units to go online this summer, however some believe it would take until the end of the year.
The current decision to expand operations follows Dangote’s commitment to reduce diesel costs in Nigeria, which is a significant fall from prior rates. These measures position Dangote Oil Refinery as a key participant in Nigeria’s transition to energy independence.
Looking ahead. As the Dangote Oil Refinery ramps up production and establishes its place in the regional energy scene, all eyes are on Africa’s wealthiest individual, Aliko Dangote, who continues to dictate the continent’s energy future.
