In a groundbreaking development for Nigeria’s oil sector, the Dangote Refinery, the largest single-train refinery globally, has officially commenced production in Lagos, Nigeria’s commercial hub.
The refinery initiated operations in the early hours of Friday after the successful delivery of a six-million-barrel crude supply earlier in the week. This marks a significant milestone for the country’s oil industry, as the refinery gears up to address Nigeria’s historical reliance on imported fuel and diesel.
“Dangote Petroleum Refinery has commenced production of diesel and aviation fuel,” the conglomerate announced Friday.
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“We thank President Bola Tinubu for his support and for making our dream come true. This production, as witnessed today, would not have been possible without his visionary leadership and prompt attention to details.
“This is a big day for Nigeria. 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. This is a game changer for our country.”
DANGOTE PETROLEUM REFINERY STARTS PRODUCTION
Dangote Petroleum Refinery has commenced production of diesel and aviation fuel.
Alhaji Aliko Dangote, elatedly thanked President Bola Ahmed Tinubu for his support and encouragement, towards the actualisation of this project. pic.twitter.com/zVUDSh1Bau— Dangote Group (@DangoteGroup) January 12, 2024
The company said the “Refinery can load 2,900 trucks a day at its truck-loading gantries” and “the products from the Refinery will conform to Euro V specifications.”
“The refinery design complies with the World Bank, US EPA, European emission norms, and DPR emission/effluent norms,” it said.
The journey to this point has been fraught with delays, raising concerns among Nigerians who have long anticipated the refinery’s completion as a solution to the soaring costs of petroleum products exacerbated by the removal of the petrol subsidy.
Nigeria, despite being one of Africa’s largest oil producers, has faced challenges due to limited refining capacity, forcing the country to depend heavily on fuel imports and subsidies. This dependence has placed a significant strain on foreign exchange reserves, especially during periods of declining oil revenues and foreign currency shortages.
The Dangote Refinery, located on a sprawling 2,635-hectare site at the Lekki Free Zone on the outskirts of Lagos city, represents a colossal investment estimated at $19 billion. The facility, officially inaugurated by former President Muhammadu Buhari in 2023, has been a key component of President Bola Tinubu’s economic reforms since taking office in May. Tinubu’s administration has taken bold steps, including ending the long-standing fuel subsidy and floating the naira currency, with the aim of attracting foreign investment and fostering long-term economic growth.
Despite the official launch, operational delays persisted due to a lack of domestic crude feedstock. To address this issue, the Nigerian National Petroleum Company (NNPC), the state-owned entity, recently entered into an agreement to supply six million barrels of crude oil to the Dangote refinery in December, kickstarting its operations. The NNPC holds a 20% stake in the refinery, employing a payment mechanism that includes both cash and crude oil supply.
The Dangote Refinery, originally slated to open in 2021, is designed to process multiple crudes concurrently, focusing on three Nigerian crude grades: Escravos, Bonny Light, and Forcados. At full operational capacity, the facility is expected to produce an impressive daily output, including 327,000 barrels per day (b/d) of gasoline, 244,000 b/d of gasoil/diesel, 56,000 b/d of jet fuel/kerosene, and 290,000 metric tons per year of propane/LPG.
While Dangote officials anticipate an initial output of 370,000 b/d, industry analysts cautiously predict that the refinery will reach its full operational capacity around mid-2025, acknowledging potential delays.
The commencement of production at the Dangote Refinery brings renewed optimism for Nigeria’s economy. Port Harcourt refinery is expected to commence operation by the first quarter of next year, according to the NNPCL. These, are expected to boost the country’s potential to alleviate the burden of fuel imports and subsidies, ultimately fostering sustainable economic growth.