.It is key to Africa’s economic transformation – Oil stakeholders
It was exciting news for Nigerians and the entire oil and gas sector as the first crude oil finally berthed at the $20bn Dangote Refinery on Thursday evening, finally signaling the commencement of fuel production at Africa’s largest refinery
This gives hope to the prediction by oil and gas stakeholders that when the Dangote refinery begins operations it would boost the Gross Domestic Product of Sub Sahara African countries.
The region is expected to be the direct beneficiary of the 650,000 barrels-per-day refinery as the project is expected to drastically reduce the countries’ fuel import majorly from Europe with an expected impact on foreign exchange outflows.
It is expedient to note that ,the milestone achievement comes as a huge relief after a series of delays since its official launch in May, with the lack of domestic crude feedstock hindering product manufacturing.
This is also, a major step towards boosting Nigeria’s domestic refining capacity and attaining energy security (self-sufficiency), as Dangote Petroleum Refinery and Petrochemicals plant has purchased 1 million barrels of Agbami crude grade from Shell International Trading and Shipping Company Limited (STASCO), one of the largest trading companies in Nigeria as well as globally, trading over 8 million barrels of crude oil per day.
The STASCO cargo contained 1 million barrels from Agbami and sailed to Dangote Refinery’s Single Point Mooring (SPM) where it was discharged into the refinery’s crude oil tanks.
The tanker chartered by the Nigerian National Petroleum Company (NNPC) symbolises the initial crude supply to Dangote’s state-of-the-art refinery as it gears up to initiate production.
It is estimated that the Dangote Refinery will cater to over 12% of Africa’s product demand, potentially reducing petroleum imports across the continent by 36%.
The refinery is also projected to generate over 100,000 job opportunities and stimulate growth in the cosmetics and plastics industries.
The NNPC, owning a 20% stake in the refinery, recently entered an agreement to supply 6 million barrels of crude oil as feedstock to the Dangote refinery in December, aiming to jumpstart operations.
Further shipments from various Nigerian offshore fields to the refinery have been chartered by NNPC, signifying the beginning of a series of scheduled crude supplies throughout December.
Upon reaching full operational capacity, the facility is anticipated to produce a daily output of 327,000 bpd of gasoline, 244,000 bpd of gasoil/diesel, 56,000 bpd of jet fuel/kerosene, and 290,000 mt/year of propane/LPG.
This much anticipated shift is expected to transform Nigeria’s oil industry landscape.
While Dangote officials foresee an initial output of 370,000 bpd, primarily focusing on jet fuel and diesel production, industry analysts expect the refinery to achieve its full operational capacity around mid-2025
Dangote had earlier said in an interview in November that the refinery would start with refining Nigerian crude.
He said the refinery’s first priority is to supply petrol to Nigeria before exporting elsewhere, including the West African region.
“We don’t want to start our refinery with foreign goods. We want to start with the Nigerian crude.
“We’re more than ready, and you will see our gasoline products soon.”
As a matter of fact the maiden 1 million barrels, which represent the first phase of the 6 million barrels of crude oil to be supplied to Dangote Petroleum Refinery by a range of suppliers, should sustain the initial 350,000 barrels per day to be processed by the facility. The next four cargoes will be supplied by the NNPC in two to three weeks and the final of the six cargoes will be supplied by ExxonMobil.
This supply 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).
This latest development will play a pivotal role in alleviating the fuel supply challenges faced by Nigeria as well as the West African countries.
Designed for 100% Nigerian crude with the flexibility to process other crudes, the 650,000 barrels per day Dangote Petroleum Refinery can process most African crude grades as well as Middle Eastern Arab Light and even US Light tight oil as well as crude from other countries.
Dangote Petroleum Refinery can meet 100% of the Nigeria’s requirement of all refined products, gasoline, diesel, kerosene, and aviation jet, and also have surplus of each of these products for export.
The refinery was built to take crude through its two SPMs located 25 kilometers from the shore and to discharge petroleum products through three separate SPMs. In addition, the refinery has the capacity to load 2,900 trucks a day at its truck-loading gantries.
Dangote Refinery 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 is designed to comply with US EPA, European emission norms, and Department of Petroleum Resources (DPR) emission/effluent norms as well as African Refiners and Distribution Association (ARDA) standards.
President of Dangote Group, Mr. Aliko Dangote stated: “We are delighted to have reached this significant milestone. This is an important achievement for our country as it demonstrates our ability to develop and deliver large capital projects. Our focus over the coming months is to ramp up the refinery to its full capacity. I look forward to the next significant milestone when we deliver the first batch of products to the Nigerian market.”
Country Chairman of Shell Companies in Nigeria, Mr. Osagie Okunbor stated: “We welcome the startup of a refinery that is designed to produce gasoline, diesel, and low-sulphur fuels for Nigeria and across West Africa and are happy to be enabling it.”
The refinery situated on the outskirts of Lagos, Nigeria’s commercial hub, had faced delays since its announcement in 2013, despite substantial installation progress made in 2019.
In September 2023, the refinery announced that it would start producing diesel and kerosene in October 2023 and gasoline one month later.
In October, it was clear that the refinery would not yet be able to start operations because the supply of crude oil was stalling, which caused considerable public reaction.
On 25 November, a new date of December 2023 was given for the start of operations, with the refinery expecting a delivery of 6 million barrels of crude oil this month.
It would be recalled that oil and gas stakeholders at this year’s Ghana International Petroleum Conference (GhIPCON) in Accra, Ghana affirmed that when the Dangote refinery begins operations it would boost the Gross Domestic Product of Sub Sahara African countries.
The conference had as its theme ‘Regional Collaboration; A Catalyst for Transformation’.
Sub-Saharan Africa presently boasts of over 132 trillion barrels of proven oil reserves, more than eight per cent of the world’s supply. Yet, it exports most of this oil to overseas refineries; which has for long denied the region of the huge opportunity for economic transformation.
The inability of the region to locally refine its oil has taken a huge toll on their economies, with 48.5 per cent of the region’s population living below $1.25per day and life expectancy hovering at 56 years.
Group Executive Director, Strategy, Capital Projects & Portfolio Development, Devakumar Edwin said the refinery when fully operational will reduce the region’s dependence on the import of petroleum products from Europe.
Edwin, who was represented by the Technical Adviser to the President of Dangote Group on Refinery and Petrochemicals, Engr. Babajide Soyode, was confident that the completion of Dangote Refinery and other modular refineries projects across West Africa, would lead to the integration of the downstream industries, and stabilise the prices of petroleum products across the African sub-region.
He stressed the need for other investors in West Africa to emulate the investment drive of Aliko Dangote in the downstream petroleum sector and make the sub-region an exporter of refined products.
Edwin also urged investors in sub-Saharan Africa to take the bull by the horns by investing in the downstream sector. “If Dangote can do it, any investor can do it. Dangote has not waited for government to regulate the downstream sector before starting the construction of the refinery.
“We don’t need foreign investors to turn around our downstream sector. African investors should be able to emulate Dangote and revive the African downstream petroleum industry,” he added.
He assured the stakeholders that the refinery is designed to process multiple grades of domestic and foreign crude, which can be converted into high-quality gasoline, diesel, kerosene, and aviation fuels that meet Euro V emissions specifications.
To bridge this gap and ensure cleaner fuel in the sub-region, Dangote Oil Refinery is being designed to accommodate multiple grades of domestic and foreign crude, and process them into high-quality petrol, diesel, kerosene, and aviation fuels that would meet Euro V emissions’ specifications, plus polypropylene. The facility, according to him, would be integrated with a petrochemical unit that will produce polypropylene and fertilisers.
Edwin said Nigeria would soon become the largest exporter of fertiliser in Africa as the Dangote Fertiliser Company is set to commence full production. According to him, pre-commissioning activities have started while construction work is still on-going at the Dangote Refinery site.
Also speaking , the Vice President of Ghana, Dr. Mahamudu Bawumia, assured stakeholders in the petroleum downstream industry that the government would create an enabling environment for downstream business to thrive competitively, efficiently and with the highest of safety standards.
“Government, through the Ministry of Energy is in the process of ensuring institutional and regulatory re-alignment of the midstream gas subsector to bring clarity and a degree of certainty to players within that subsector.”
The GhIPCON is designed to actively bring to the fore the operating industry’s perspective and guidance on issues of governmental and regulatory policy, as well as best practices for the advancement of the industry across West Africa.
