In a significant milestone for Nigeria’s energy sector, the Dangote Oil Refinery commenced supplying petroleum products to the domestic market on Tuesday, according to sources familiar with the matter, cited by Reuters.
Abubakar Maigandi, head of the Independent Petroleum Marketers Association of Nigeria, revealed that local oil marketers had set the price of diesel at 1,225 naira ($0.96) per liter after securing a bulk purchase agreement, before adding their mark-up.
According to Reuters, Maigandi said that the association’s members, overseeing approximately 150,000 retail stations nationwide, are integral to the distribution process.
Tekedia Mini-MBA edition 14 (June 3 – Sept 2, 2024) begins registrations; get massive discounts with early registration here.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
Meanwhile, the smaller Depots and Petroleum Products Marketers Association of Nigeria disclosed that its members were in the process of obtaining letters of credit to procure petroleum products from Dangote.
“Our members are discussing with banks, and these talks have reached advanced stages. When we have our letters of credit, we will begin lifting products,” stated Femi Adewole, the association’s executive secretary.
Echoing these sentiments, an executive from the company and various fuel marketing organizations informed Reuters that oil marketers were loading diesel from the refinery, marking a pivotal development in Nigeria’s quest for energy independence.
Devakumar Edwin, a group executive at Dangote, confirmed the commencement of diesel and jet fuel distribution to the local market.
“We have substantial quantities. Products are being evacuated both by sea and road. Ships are lining up one after another to load diesel and aviation jet fuel. Ships load a minimum of 26 million liters, though we try to push for 37 million liters vessels, for ease of operations,” Edwin explained.
The inauguration of the refinery, which occurred in May 2023, was a momentous occasion after years of delays and setbacks. With the capacity to process up to 650,000 barrels per day, the refinery is poised to become the largest in both Africa and Europe once it attains full operational capacity, expected either this year or the next.
However, despite these strides, the refinery faces significant challenges in operating at its maximum potential. One key obstacle is the insufficient fuel supply from the Nigerian National Petroleum Corporation Limited (NNPCL), which hampers the refinery’s ability to operate at full capacity. Nigeria, despite being Africa’s most populous country and a leading oil producer, ironically imports the majority of its fuel due to inadequate refining capabilities.
Against this backdrop, the refinery had earlier this year, set its eyes on the US for crude oil importation, marking a departure from the earlier idea of sourcing crude oil exclusively from Nigeria. The Trafigura Group brokered a deal to supply Dangote Refinery with 2 million barrels of WTI Midland crude in February that was delivered by the end of March,
The Dangote refinery holds immense potential to alleviate Nigeria’s reliance on imported petroleum products. However, overcoming challenges such as fuel supply shortages will be crucial for realizing its potential to transform Nigeria’s energy industry and reduce its reliance on imported fuel, as the refinery forges ahead in supplying petroleum products to the Nigerian market.