Dangote Refinery, which is poised to be commissioned later in the year (2022), according to Argus, a London-based petroleum and energy market information provider, will positively impact Nigeria’s economy.
During an online workshop organised by the Major Oil Marketers Association of Nigeria (MOMAN), Vice President, Crude and African Markets, Argus, James Gooder said when the 650,000 barrels per day refinery commence its operations, a significant amount of foreign exchange (forex) would be saved as freight costs since petroleum products would then be refined in Nigeria.
“The impact of Dangote – it’s because of the freight advantage. You have production right here in Lagos. So, the crude doesn’t have to be sent to Europe, refined, and brought back. All of that freight saving is made. And what that will do is, it will reduce the marginal price that others have to compete with,” Gooder said.
He, however, noted that the Dangote Refinery would not solve all the petroleum issues relating to Nigeria.
According to him, Nigeria is growing in terms of population, wealth, and consumption, adding that with the demand rise against the low production capacity, the country would definitely need more refineries of Dangote capacity to be able to meet the growing demand.
“On whether Dangote Refinery will solve all the petroleum issues in the country, the sure answer is no. It will not because Nigeria is a growing country, it’s growing in terms of population, it’s growing in terms of wealth and it’s growing in terms products consumption.
“And so, if you are to look at the rising Nigeria’s consumption against Nigeria’s production of refined products, you will see a kind of rise in line of demand and a very low line of production with a bump up to 650,000 barrels a day.
“But that’s nowhere close. So, in order to meet that demand, you will not only have to have Dangote now, you will have to have another Dangote every five years or so, just to keep up. And so, it’s not going to happen, I fear.
“The truth is, even if you have a new Dangote every five years, you will still have to pay the market price. So, that wouldn’t necessarily solve the problem,” he added.