• Sunday, February 25, 2024
businessday logo

BusinessDay

After first crude stock, here are next steps for Dangote refinery

The Dangote Refinery, Africa’s largest oil refinery project, has reached a significant milestone with the arrival of its first crude stock. This marks a crucial step towards the refinery’s full commissioning and the commencement of fuel production in Nigeria.

The delivery from Shell’s trading arm of 1mn barrels from one of Nigeria’s offshore fields represents the first tranche of 6mn barrels of crude due to be supplied to the facility from a range of suppliers, the Dangote Group said in a statement on Friday.

The crude will enable the refinery to process an initial 350,000 barrels of crude oil a day into petroleum products, including petrol, diesel and low-sulphur fuels.

Read also: Four more cargoes set to arrive Dangote Refinery in two weeks

Aliko Dangote, president and chief executive of the Dangote Group, described the deal as a “significant milestone” and an “important achievement”.

With the receipt of the first crude oil,k the focus now shifts to the next stages of the project.

“Our focus over the coming months is to ramp up the refinery to its full capacity. I look forward to the next significant milestone when we deliver the first batch of products to the Nigerian market,” Dangote said.

The Dangote Group said Shell’s crude would be used for an initial test of the facility’s capabilities before the processing of diesel, aviation fuel and liquefied petroleum gas and latterly premium motor spirit, starts.

Shell Nigeria country chair Osagie Okunbor welcomed the start-up of the refinery, adding that Shell was “happy to be enabling it”.

“This is good news. The volumes mentioned are small so it implies that they are being used for testing rather than full-on production,” Andrew Alli, former CEO of the Africa Finance Corporation (AFC) said on X, formally known as Twitter.

He added, “But an important step. The refinery as I have said “severally” will not have much of a material positive effect on fuel prices or FX but it will increase the value added and the economic complexity in our economy, both of which are good things”.

Read also: Dangote refinery receives one million maiden crude cargo

The next four crude cargoes will be supplied by the state-owned oil company the Nigerian National Petroleum Corporation (NNPC) in “two to three weeks” and ExxonMobil will supply the last of the initial six cargoes at an unnamed date, the group said.

Dangote said last month that he expected the refinery to reach its maximum capacity at the end of next year, although the IMF has said it doubts it will reach more than a third of that target by 2025.

The refinery situated on the outskirts of Lagos, Nigeria’s commercial hub, had faced delays since its announcement in 2013, despite substantial installation progress made in 2019.

In September 2023, the refinery announced that it will start producing diesel and kerosene in October 2023 and gasoline one month later.

Read also: Dangote refinery secures 300,000bpd crude refining licence

In October, it was clear that the refinery would not yet be able to start operations because the supply of crude oil was stalling, which caused considerable public reaction.

On 25 November, a new date of December 2023 was given for the start of operations, with the refinery expecting a delivery of 6 million barrels of crude oil this month.