Dangote Refinery to start crude refining October – S&P Global

Dangote Refinery, billed as a game-changer for Nigeria and sub-Saharan Africa, will receive its first cargo of crude in the next two weeks and will begin producing up to 370,000 barrels per day (bpd) of diesel and jet fuel from October, a senior company executive told S&P Global Commodity Insights.

In an exclusive interview with S&P Global, Devakumar Edwin, Dangote Group Executive Director, who is overseeing the $19.5 billion refinery, outlined a detailed production timeline, shed light on crude and product flows and laid out a litany of complications and delays to the project since it was first mooted in 2013.

“Right now I’m ready to receive crude,” said Edwin, who previously ran Dangote Cement. “We are just waiting for the first vessel. And so as soon as it comes in we can start.”

Edwin said the refinery, which was officially inaugurated by former president Muhammadu Buhari in May, will launch in phases, beginning with 350,000-370,000 bpd of diesel and jet fuel by October, when the crude distillation unit, sulfur block and hydrogen plant should be online.

Then on November 30, he said, the refinery will start the phased ramp-up to 650,000 b0d, around half of it petrol, the key area of Nigerian fuel demand.

S&P Global analysts predict the refinery will not hit full operating capacity until mid-2025, according to a recent note, with further delays still possible. Still, forecasts from S&P Global suggest Nigerian petrol production will exceed imports until the 2040s as a result of the refinery.

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Although the refinery was designed to process light sweet Nigerian crude, state-owned Nigerian National Petroleum Company (NNPC) Limited, which is a shareholder in the project, cannot supply the refinery until November, Edwin said, so Dangote is buying oil from trading houses. Vitol and Trafigura recently carried out inspections of the plant, he said.

“At the last minute [NNPC] said, ‘We have actually committed our crude on forward basis to someone else’, so immediately they don’t have the crude,” he said. This is a temporary issue, and the refinery should run on exclusively Nigerian crude by November, he said.

That Nigerian oil will be purchased in US dollars, not naira as some reports had suggested, because it is located in a free zone on the outskirts of Lagos, Edwin said. However, NNPC will supply some crude at knockdown prices due to its equity stake.

Edwin said the scale of the refinery meant being “solely dependent on Nigerian crude would not be advisable”, meaning the refinery can process most African crudes, apart from heavy Angolan grades, as well as Middle Eastern Arab Light and even US light tight oil.

“We can even take some of the Russian grades… if the global system opens up to allow us to receive [them],” he said.

Edwin, who joined Dangote Group in 1992, said the refinery would be “enormously beneficial to the country” by establishing a reliable supply of “environmentally-friendly” refined products and bringing “a huge amount of foreign exchange into the country.”

It will also ease a fuel supply crisis in import-dependent West Africa, where Nigeria’s recently-scrapped fuel subsidy created a thriving illicit market for gasoline amid price fluctuations.

“The money will be coming back in, and it will go for further investments,” Edwin said. “[Aliko Dangote] is from Nigeria and his focus is always on Nigeria.”