Standard and Poor’s (S&P) Global Commodities Insights analysts have projected a delay in the commencement of petrol supply from the Dangote refinery, suggesting a start date in the fourth quarter of 2024 rather than the May timeline stated by the company.
This revelation, made during an S&P podcast discussing West Africa’s oil product flows, stems from the instability in the Nigerian oil sector.
During the podcast titled “Exploring West Africa’s oil product flows in a changing refining landscape,” Kelly Norways, an African energy expert at S&P, discussed the anticipated impact of the Dangote refinery on energy imports in West Africa. Norways noted the refinery’s potential to substantially reduce energy imports, particularly petrol, estimating a supply of up to 290,000 barrels daily between 2024 and 2026.
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However, Norways tempered expectations by stating that despite signs of activity at the refinery, the timeline for gasoline production remains uncertain.
“We are starting to see signs of activities, but all eyes are on when we’ll start to see gasoline production will commence from that project. There is a significant amount of pressure from the Nigerian government for significant volume of that supply to be sent to the domestic market,” she said.
While Dangote had expressed intentions to produce gasoline by May, S&P analysts anticipate a more realistic timeline for the fourth quarter of 2024.
“In reality, when we see that start scale up is still subject to debate. Dangote has recently been espousing some punchy timelines. They have most recently been saying that they are looking to produce gasoline by May. But in reality, our analyst expect that would be something like the fourth quarter of this year in a more realistic timeline,” she added.
The discussion also addressed shifts in petroleum product flows into West Africa, noting a reduction in supply from traditional suppliers such as the Netherlands’ Amsterdam and Rotterdam refineries. This decline is attributed to quality improvements and new regulations implemented since 2022, reflecting broader changes in the global refining landscape.
The Dangote refinery, officially commissioned in May 2023, has faced challenges operating at full capacity due to a series of delays. Despite setting a production projection for October, the 650,000 barrels per day oil plant missed its target, marking the second time in 2023 it raised hopes of ending petrol importation in Africa, particularly Nigeria.
Although it began receiving crude oil around December, production did not commence until March, when diesel distribution to local marketers commenced.
The refinery’s inability to start production stems from insufficient crude oil supply from the Nigerian National Petroleum Company Limited (NNPCL), a reflection of the broader dwindling oil production in Nigeria.
In response, Dangote Refinery has adopted an innovative approach, sourcing one-third of its oil from the United States to address domestic supply challenges and enhance operational efficiency.
Energy experts said that while the refinery holds promise for reducing energy imports and boosting regional energy security, operational hurdles must be addressed to realize its full potential.