In accordance with President Bola Tinubu’s mandate, which requires the Nigerian National Petroleum Company Limited to sell crude to the plant and other domestic refineries in naira, the Dangote Petroleum Refinery will require roughly N1.7 trillion worth of crude oil each month.
Tinubu gave NNPC instructions on Monday to sell crude in naira to the Dangote refinery and other future refineries. This was announced in a post on his official X handle by Bayo Onanuga, the Special Advisor to the President on Information and Publicity.
According to Onanuga, the Federal Executive Council took action on Monday to guarantee the stability of the refined fuel pump price and the dollar-to-naira exchange rate.
An analysis of figures from various industry reports showed that the $20 billion Dangote refinery located in Lekki, Lagos, would gulp about N1.7 trillion of crude oil monthly should NNPC meet the mandate of the President.
The average cost of crude in 2024 will be about $83/barrel, based on data from Statistica, a global statistical firm. The President of Dangote Industries, Alhaji Aliko Dangote, recently stated that his refinery would hit 500,000 barrels per day capacity in August and 550,000 bpd in December 2024.
This means that between August and November this year, the refinery targets to refine 500,000 bpd of crude oil before proceeding to hit the 550,000 bpd mark in December.
Going by 500,000bpd refining capacity and the $83/barrel average price of Brent, the global benchmark for crude, it implies that the plant would require about $41.5m worth of crude oil daily, which represents N56.55bn, using the average exchange rate of N1,362.6/$ in 2024.
This, therefore, implies that the refinery would gulp about N1.7 trillion worth of crude oil monthly based on the recent directive of the President mandating NNPC to supply crude to Dangote and other domestic refineries in naira.
Operators speak
The National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria, Chief Ukadike Chinedu, said though Nigeria has been battling to ramp up crude oil production, NNPC should endeavour to meet the President’s order.
“It is an order by the President that crude be sold to domestic refineries in naira, and that includes the Dangote refinery. We know that the refinery is massive and requires over 500,000 barrels of crude oil daily, so NNPC and its partners should work harder to meet this demand.
“We just have to try. The government has been talking about ramping up crude oil production. This is the time to deliver on that. The President has given an order, and it is up to NNPC and the ministry to meet that order,” he stated.
On his part, the Publicity Secretary of the Crude Oil Refiners Association of Nigeria, Eche Idoko, said the supply of crude to local refineries in naira would bring down the cost of petrol and strengthen the naira against the dollar.
“The sheer fact that the crude will be sold in naira will give the naira a lot of leverage against the dollar, and by implication, the naira will appreciate against the dollar. Automatically, when there are fewer naira chasing the dollar, it will affect the price.
“It means the cost of refining will drop, and this will affect the pump price. We will see a rebound in the pricing of fuel once the President’s order is implemented,” he stated.
During a tour of the refinery with journalists recently, Dangote said the refinery was fully online, with over $26 billion expected annually.
“Successful completion of the trial run in January 2024. Refined and intermediate products include polypropylene, naphtha, RCO, gasoline, diesel, and jet fuel. The steady-state production phase commenced in March 2024.
“Ramping up production to reach 500 kbpd (15 crude cargoes a month) by next August, 550 kbpd by the end of the year, and 650 kbpd by the first quarter of 2025. Gasoline production is to commence in July, with sales starting in August. Annual revenue is projected to exceed $26 billion,” Dangote stated.
He added that the refinery has dedicated loading gantries with 86 loading bays; dedicated marine facilities for offtake of crude and loading of petroleum products; 900-kilo tonnes per annum of polypropylene plant; 36 ktpa sulfur; and 585 ktpa carbon black production.
The total storage capacity of the refinery is set at 4.5 billion litres, which can cover 20 days of crude product storage for 15 days of Nigeria’s petrol consumption.
He averred that the refinery would produce 53 million litres of gasoline per day and 1.1 million metric tons per day.
“The Dangote refinery can meet Nigeria’s requirements and have a surplus for exports,” he stated.
On Tuesday, NNPC announced its goal to increase crude oil production to two million barrels per day by the end of the year as it strives to meet domestic crude oil demand as well as exports.
The country’s daily production rose from 1.27 million barrels in June to 1.6 million in July, according to the Nigerian Upstream Petroleum Regulatory Commission.
Speaking during a meeting with maritime stakeholders at the Nigerian Navy Headquarters, the Group Managing Director of NNPC, Mele Kyari, expressed optimism that the target would be met, emphasising that NNPC was fully committed to achieving it.
