Dangote Refinery to Reach 650,000bpd by June, Plans Crude Imports

The Dangote Petroleum Refinery is set to import additional crude oil as the supply from the Nigerian National Petroleum Company Limited (NNPC) falls short of the requirements for fuel production at the $20 billion Lekki-based facility.

Officials at the refinery have reported that production has increased to approximately 500,000 barrels per day (bpd), with a target of reaching 650,000bpd by June this year. Despite the ongoing naira-for-crude deal, as directed by President Bola Tinubu last year, the facility will need to import more crude to meet its production goals.

For the 650,000-capacity refinery, the NNPC is reportedly struggling to supply 350,000bpd from the 450,000bpd crude meant for Nigeria’s local consumption. With its current production capacity of 500,000bpd, officials have indicated a need to look beyond Nigeria for the necessary feedstock.

One source at the plant, who spoke on condition of anonymity, stated, “Of course! This is a 650,000 barrels per day capacity refinery. And as you know, we are also ramping up. You see, maybe by the middle of the year, we will hit 650,000. Do you know what 650,000bpd means?”

Another source added, “It is not that anybody is saying NNPC cannot do it. No! But you look at what we have. We are not a 200,000bpd refinery. We are talking about 650,000 barrels. Currently, we are at 500,000bpd; we will ramp to 650,000 by midyear. You know what it means? So, it is a normal process to source crude oil anywhere it is available.”

A consultant to the refinery emphasized the scale of the operation, stating, “It is not that anybody is saying NNPC cannot do it. The game is up, and the game is for the ’big boys’. How many 650,000-capacity refineries do you have in this world? Even in the entire Europe? Have you seen the OPEC report? They said the refinery is affecting their PMS market in Europe. Of course, the eagle has landed.”

On the burn rate of Dangote petrol, the consultant explained, “The whole thing is simple. You know we are producing the Euro 5 standard. So, the quality is bound to be high. That’s what Nigerians are experiencing in the burn rate of our petrol.”

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Naira-for-Crude Deal: As Nigeria’s refining capacity increases, the 450,000 barrels of crude oil allocated for local refineries is no longer sufficient. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) revealed that the Dangote refinery, the Port Harcourt refinery, and six others would need 770,500 barrels for daily fuel production.

In July, President Bola Tinubu ordered the NNPC to sell crude oil to local refineries in naira. “The Federal Executive Council has approved that the 450,000 barrels meant for domestic consumption be offered in Naira to Nigerian refineries, using the Dangote refinery as a pilot. The exchange rate will be fixed for the duration of this transaction,” Tinubu’s spokesman, Bayo Onanuga, announced last year.

In October, the committee supervising the naira-for-crude deal commenced the sale of crude to only the Dangote refinery in naira, stating it would sell to only petrol-producing refineries. However, with the Port Harcourt and Warri refineries coming on stream, more refineries would be considered for the naira-for-crude arrangement.

The NUPRC stated that 123.5 million barrels of crude would be needed by eight refineries in the first six months of 2025. The refineries include Dangote refinery, Port Harcourt refinery, Warri refinery, Kaduna refinery, Opac refinery, Waltersmith refinery, Duport Midstream Company Limited, Aradel refinery, and Edo refinery.

According to the crude oil production forecast of producing oil companies and the refining requirement of functional refineries in Nigeria, signed by the NUPRC Chief Executive, Gbenga Komolafe, the Dangote refinery is forecasted to need 550,000 barrels of a blend of Nigerian crude oil daily, 17.05 million barrels monthly, and 99.55 million barrels between January and June 2025.

Expansion and Future Plans: The Dangote refinery is already building eight more tanks to store imported crude. The $20 billion refinery plans to stockpile imported crude oil as local supplies become unreliable. Officials of the refinery have stated that low crude supply from the NNPC “is driving import dependence.”

The construction of eight additional tanks will increase crude storage capacity at the refinery by 41.67 percent to 3.4 billion litres. “Importing crude from other countries instead of buying locally means that our crude stockpiles will have to be higher,” said Devakumar Edwin, Vice President in charge of oil and gas business at Dangote Industries.

With the implementation of the naira-for-crude initiative, the NNPC is expected to supply about 385,000bpd of crude oil to the Dangote refinery to be paid for in naira. However, it could not be immediately confirmed if this has been the case.

Experts have argued that as Nigeria ramps up crude production, local refineries may have to resort to importation.