Dangote Refinery Turns To US Crude Amid Supply Challenges

The $20 billion Lekki-based refinery, aiming to reach its full refining capacity of 650,000 barrels per day (bpd) by June 2025, is currently grappling with insufficient crude oil supplies from the Nigerian National Petroleum Company Limited (NNPC).

According to The Africa Report, the shipment, which departed the US earlier this month, is expected to arrive in Nigeria by February. An insider revealed, “About 12 million barrels of crude have departed the US and should arrive in Nigeria by February.” This marks a significant shift for the refinery, which has had to depend on imported crude oil to sustain operations.

Despite ramping up production to 500,000bpd, officials at the Dangote Refinery acknowledge that the feedstock needed to achieve its target cannot be solely supplied by the NNPC. The state-owned company has struggled to deliver the 350,000bpd required by the refinery from the 450,000bpd crude earmarked for Nigeria’s local consumption.

In July 2024, President Bola Ahmed Tinubu directed the NNPC to sell crude oil to local refineries in naira to strengthen domestic refining. However, this policy has not sufficiently alleviated supply challenges for the Dangote Refinery. The facility, which requires 17.05 million barrels of crude monthly, has now turned to international markets to bridge the gap.

To support its increasing reliance on imported crude, the refinery is constructing eight additional storage tanks, boosting its crude storage capacity by 41.67% to 3.4 billion litres. This expansion highlights the refinery’s strategy to stockpile imported crude oil and mitigate the risks posed by unreliable local supplies.

“Importing crude from other countries instead of buying locally means that our crude stockpiles will have to be higher,” said Devakumar Edwin, Vice President in charge of oil and gas at Dangote Industries. The refinery also issued a term tender in May 2024 to purchase two million barrels of West Texas Intermediate (WTI) Midland crude monthly for 12 months, totaling 24 million barrels of crude over a year.

The refinery’s reliance on imported crude underscores broader challenges facing Nigeria’s oil sector. According to Gbenga Komolafe, Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission, local refineries like Dangote will require 99.55 million barrels of crude between January and June 2025 to meet refining demands.

As fasnewsng.com reports, the Dangote Refinery’s pivot to foreign crude represents a temporary solution to sustain operations amid local supply constraints. However, it also raises questions about Nigeria’s ability to meet the demands of its flagship refinery, which was once seen as a game-changer for reducing the country’s reliance on imported fuel.

By Augustine Idoje