August 22, 2024
Cosmina Craciunescu Timofte
London, England, The United Kingdom
Picture Source: https://businessday.ng/news/article/first-pms-delivery-from-dangote-refinery-expected-in-september/. A view shows part of Dangote oil refinery in Ibeju Lekki district, on the outskirts of Lagos, Nigeria. Picture taken August 7, 2019.
SUMMARY
Nigeria’s 650,000 barrels per day Dangote Refinery is currently undergoing test runs to assess the production of gasoline. Full operation is expected to take place by mid-September of this year, according to IIR Energy. This refinery, which was built by Aliko Dangote, in the region encompassing the outskirts of Lagos, is known to have begun its operations in January. He declared that so far, it was able to “produce diesel and other distillate fuels” (Maler, 2024), and that the “gasoline deliveries from the refinery would start in July.” (Maler, 2024) There is a possibility for further extensions to be approved on this project.
BACKGROUND
Once the tests come to an end, and the Dangote Refinery becomes fully functional, it is set to “upend the Europe-to-Africa fuel trade” (Maler, 2024). This will have a significant positive impact on Nigeria, as it can reduce its “reliance on imported refined products” (Maler, 2024).
Following a meeting that took place with the “Implementation Committee on the Crude Oil sales in Naira reported that the first <<premium motor spirit>>” (Egboboh, 2024) from Dangote to the Nigerian market, as early as September 2024. The agreements that were already in place have to be strictly followed by all of the parties involved in this ordeal. Moreover, the main reason for the meeting was to “review progress on key initiatives, including the upcoming commencement of Naira payments for crude oil to the Dangote Refinery” (Egboboh, 2024). The payments are expected to start no later than October 1st, 2024.
The main roles of the stakeholders were also established in this meeting, including the “Nigerian Midstream and Downstream Petroleum Regulatory Authority, Central Bank of Nigeria, Nigerian Upstream Petroleum Regulatory Commission, and the African Export-Import Bank” (Egboboh, 2024). The sole purpose of the roles was to ensure a secure and solution-focused implementation of this project. Fortunately, the updates regarding the Dangote Refineries communicated that these are “expected to record significant production increases from November 2024” (Egboboh, 2024).
In the talks between the members of the Committee, the “need for transparency” (Hauwa, 2024) was established as a main focus for the stakeholders by the Ministry.
The “Federal Executive Council” of Nigeria “approved that the 450,000 barrels meant for domestic consumption will be offered in Naira to Nigerian refineries, using the Dangote refinery as a pilot,” (Hauwa, 2024). This particular move was undertaken with the intention to “ensure the stability of the pump price of refined fuel and the dollar-naira exchange rate” (Hauwa, 2024). According to the source, the findings “show that the Dangote refinery requires 15 cargoes of crude oil yearly” (Hauwa, 2024). Moreover, in response to these results the Ministry of Finance was able to bring together a “technical sub-committee tasked with developing the framework for the sale of crude oil to local refineries in Naira” (Hauwa, 2024).
The increase in the production of oil in the Dangote Refinery is producing interesting effects both on national and international terms. As an example, this significant advantage bought by the national refinery of Nigeria is resulting in a “reduction of the US crude oil intake” (Kennedy, 2024). According to the source, the developments taking place at the Dangote Refinery left a lasting impact on oil prices, when the refinery stated that “it might resell imported US oil, as it shifts its focus to domestic resources.” (Kennedy, 2024). In the wake of creating economic instability for the international players, it is known that “Dangote is what will keep Nigeria in the oil and gas game” (Kennedy, 2024), making it a powerful player considering the financial gains following the most recent developments. The potential of the refinery is substantial, especially when taking into account that it will be able to process “650,000 barrels of crude oil per day, making it competitive with the United States’ largest refineries and over 50% bigger than the largest refinery in Europe” (Kennedy, 2024).
REFERENCES
Cosmina Craciunescu Timofte: “Nigeria’s Dangote Refinery Set to Start Gasoline Output in September”
Egboboh, C., “First Petrol from Dangote Refinery Expected in September”, Business Day, Published August 21, 2024, [Online], available at: https://businessday.ng/news/article/first-pms-delivery-from-dangote-refinery-expected-in-september/, accessed August 21, 2024
Hauwa, A., “Local Refineries to Roll Out Fuel in September”, Voice of Nigeria, Business, Published August 20, 2024, [online], available at: https://von.gov.ng/local-refineries-to-roll-out-fuel-in-september/, accessed August 21, 2024
Kennedy, C., “Nigeria’s Massive Dangote Refinery Taking Less American Crude”, Oil Price, Published August 21, 2024, [Online], available at: https://oilprice.com/Latest-Energy-News/World-News/Nigerias-Massive-Dangote-Refinery-Taking-Less-American-Crude.html, accessed August 21, 2024
Maler, S., “Nigeria’s Dangote Refinery Set to Start Gasoline Output in September, IIR Says”, Reuters, Published August 21, 2024, [online], available at: https://www.reuters.com/markets/commodities/nigerias-dangote-refinery-set-start-gasoline-output-sept-iir-says-2024-08-21/, accessed August 21, 2024
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