Dangote Refinery to Consume N1.7tn Worth of Crude Oil Monthly
In a move aimed at stabilizing the pump price of refined fuel and the dollar-naira exchange rate, President Bola Tinubu has directed the Nigerian National Petroleum Company Limited (NNPC) to sell crude oil to the Dangote Petroleum Refinery and other domestic refineries in naira.
According to industry reports, the $20 billion Dangote refinery, located in Lekki, Lagos, will require about N1.7 trillion worth of crude oil monthly to operate at its maximum capacity. This is based on the refinery’s planned production capacity of 500,000 barrels per day (bpd) in August and 550,000bpd in December 2024.
The average cost of crude oil in 2024 is about $83 per barrel, according to data from Statistica, a global statistical firm. With a daily refining capacity of 500,000bpd, the refinery would require about $41.5 million worth of crude oil daily, which translates to N56.55 billion using the average exchange rate of N1,362.6 per dollar.
Industry operators have welcomed the directive, with the National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria, Chief Ukadike Chinedu, urging NNPC to work harder to meet the demand. "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," he stated.
The Publicity Secretary of the Crude Oil Refiners Association of Nigeria, Eche Idoko, also expressed optimism that 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," he stated.
The Dangote refinery, which is fully online, is expected to produce 53 million liters of petrol per day and 1.1 million tonnes per day. The refinery has dedicated loading gantries with 86 loading bays, dedicated marine facilities for offtake of crude and loading of petroleum products, and a total storage capacity of 4.5 billion liters.
Meanwhile, NNPC has 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 export. 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.
