Nigeria: Dangote oil refinery to help solve fuel shortage

An oil refinery set up by Nigerian billionaire Aliko Dangote could be the perfect rescue for Africa's largest oil producer, which is struggling to supply products ready for motorists.

Despite Africa's largest oil reserves, Nigeria's inability to refine products locally has seen the country's motorists queue for hours at gas stations jostling for scarce resources.

Now, Dangote's $19 billion oil refinery, scheduled for completion later this year, could solve part of the problem by refining oil locally. The plant was originally expected to cost $9 billion when construction began in 2015. 

Located in the Lekki Free Trade Zone near Lagos, Nigeria's commercial nerve center, the refinery is expected to be the largest oil plant in Africa and the largest single-train facility in the world when completed. 

Officials say they had to hire an additional 17,000 workers to speed completion this year, bringing the workforce to 57,000 workers. 

Its prospectus indicates that the oil refinery complex will have a capacity of 650,000 barrels and will process a variety of light and medium crudes, as well as clean Euro-V grade fuels, including gasoline and diesel, jet fuel and polypropylene. 

It is planned to produce 50 million liters of gasoline per day; and an annual production of 10.4 million tons of gasoline, 4.6 million tons of diesel and 4 million tons of jet fuel per year. 

It will also produce 0.69 million tons of polypropylene, 0.24 million tons of propane, 32,000 tons of sulfur and 0.5 million tons of carbon black feed. 

"It pains me to see a country as big and resourceful as Nigeria with a large population importing all of its petroleum products, so we decided it was time to take up this challenge," Dangote, chairman of the Dangote Group, said at the Nigerian Oil and Gas Summit 2022 in Lagos.

"It is not the sole responsibility of the government to address the challenge of importation of petroleum products in Nigeria. No, we must work with the government to solve the problem of oil importation.

"As a country, we should not be comfortable generating revenue solely from the export of crude oil, because tomorrow people may not need crude oil. 

"If we don't move from crude oil to something else, we're going to be in trouble as a country. That's one of the things I've taken it upon myself to help solve," he said. 

Nigeria has been facing a severe shortage of refined fuel since April this year. And motorists who frequent black marketers are paying at least 150% more than the pump price of 165 naira (0.35 euro cents) per liter, but are not sure of the quality of the fuel.

Some motorists reported that their vehicles developed defects after using adulterated gasoline purchased from black market operators. 

The scarcity of products continued even after the new National Nigeria Petroleum Corporation (NNPC) insisted on the availability of fuel. 

Although retailers have adjusted their pump prices from 165 naira ($0.35) per liter to 175 naira ($0.39) per liter, the product remains elusive despite claims of massive importation from Nigeria. 

Nigeria, which began exploring for and producing crude oil in 1956, remains a major importer of petroleum products even though it exports an average of two million barrels of crude oil per day. 

Its four oil refineries in Warri, Port Harcourt and Kaduna have been moribund for decades, making Africa's most populous country dependent on imports that consume most of the foreign exchange earnings from crude exports. 

Mr. Devakumar Edwin, group executive director of Dangote Industries, confirmed the $19 billion cost of the venture when completed and that the petrochemical project houses the world's largest ammonia plant, which had begun producing fertilizer. 

He said the state-owned Nigeria National Petroleum Company (NNPC), a facilitator of oil and gas exploration and development, has acquired a 20% stake in the $2.7 billion refinery. 

NNPC CEO Mele Kyari confirmed in July 2022 that the company had paid an initial $1 billion for the common shares it had acquired in the refinery 

Kyari said the investment in the refinery will ensure Nigeria's energy security. 

With the Dangote refinery in place, coupled with the planned completion of the rehabilitation of the Port Harcourt, Warri and Kaduna refineries by the end of 2023, Nigeria could become a hub for petroleum products in Africa.

He explained that the rehabilitation of the three state-owned refineries was underway, saying, "We have tried to repair our refineries. We have awarded the contracts. 

"We, as the national oil company, have a responsibility to ensure the energy security of this country and that means you have to secure the sources of supply," Kyari said.  

"This means that with NNPC's refineries in place and Dangote's refineries operating with other initiatives we are pursuing, we will have a huge oil production hub in West Africa. 

"This will change the flow of product supply around the world and scarcity will be history in Nigeria."