The Dangote Petroleum Refinery will need about N1.7 trillion worth of crude oil each month, following President Bola Tinubu’s directive mandating the Nigerian National Petroleum Company Limited (NNPC) to sell crude to the plant and other domestic refineries in naira.
Presidential Directive
On Monday, President Tinubu instructed NNPC to sell crude to the Dangote refinery and other upcoming refineries in naira. The Special Adviser to the President on Information and Publicity, Bayo Onanuga, announced this decision on his official X handle. The Federal Executive Council adopted this measure to stabilize the pump price of refined fuel and the dollar-naira exchange rate.
Refinery’s Crude Oil Consumption
An analysis of industry reports reveals that the $20 billion Dangote refinery in Lekki, Lagos, would require about N1.7 trillion in crude oil monthly if NNPC adheres to the President’s mandate. The average cost of crude in 2024 is approximately $83 per barrel, based on data from Statistica.
Refinery Capacity and Production Goals
President of Dangote Industries, Alhaji Aliko Dangote, recently stated that the refinery aims to reach a capacity of 500,000 barrels per day in August and 550,000 barrels per day by December 2024. Between August and November, the refinery plans to refine 500,000 barrels per day of crude oil, increasing to 550,000 barrels per day in December.
With a refining capacity of 500,000 barrels per day and an average crude price of $83 per barrel, the plant would need about $41.5 million worth of crude oil daily, equating to N56.55 billion at the average 2024 exchange rate of N1,362.6 per dollar. This translates to approximately N1.7 trillion in monthly crude oil consumption.
Comments from Industry Experts
Chief Ukadike Chinedu, National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria, emphasized the need for NNPC to meet the President’s order. He stated that while Nigeria struggles to ramp up crude oil production, the NNPC and its partners must work to fulfill the demand set by the President.
Publicity Secretary of the Crude Oil Refiners Association of Nigeria, Eche Idoko, noted that selling crude to local refineries in naira could lower petrol costs and strengthen the naira against the dollar. He expects that the implementation of the President’s order will result in a decrease in refining costs and a drop in pump prices.
Refinery Progress and Future Plans
During a recent tour, Dangote highlighted that the refinery is fully operational, with expected annual revenue of over $26 billion. The facility is set to complete trial runs by January 2024 and begin steady state production in March 2024. It aims to ramp up to 500,000 barrels per day by next August and 550,000 barrels per day by the end of the year, with gasoline production starting in July.
The refinery will have a total storage capacity of 4.5 billion liters, covering 20 days of crude requirement and 15 days of Nigeria’s petrol consumption. It is designed to produce 53 million liters of petrol per day and 1.1 million tonnes of diesel per day, with excess capacity available for export.
NNPC’s Production Targets
On Tuesday, NNPC announced its goal to increase crude oil production to two million barrels per day by the end of the year to meet domestic and export demands. The country’s daily production rose from 1.27 million barrels in June to 1.6 million in July, according to the Nigerian Upstream Petroleum Regulatory Commission. Group Managing Director of NNPC, Mele Kyari, expressed confidence in meeting this target during a meeting with Maritime Stakeholders at the Nigerian Navy Headquarters.
