Faith Nyasuguta
Africa’s largest refinery, the $20 billion Dangote Petroleum Refinery, is turning to international crude suppliers to fill the gap left by insufficient domestic deliveries as it works to ramp up operations.
Since the beginning of the month, the refinery has imported over three million barrels of crude from the United States, according to Bloomberg. Additionally, it has sourced Angola’s Pazflor grade and Algeria’s Saharan Blend through a deal with Glencore Plc, highlighting its increasing reliance on foreign oil.
The refinery, with a capacity of 650,000 barrels per day (bpd), is the largest in Africa and bigger than Europe’s ten biggest refineries combined. Despite its massive capacity, securing enough crude locally has been a challenge. Nigeria, Africa’s top oil producer, has struggled with declining output due to theft, pipeline vandalism, and underinvestment in infrastructure, making it difficult to meet the refinery’s needs.
In response to the supply shortfall, Dangote Refinery founder Aliko Dangote revealed plans to source crude from other African oil-producing nations to maintain consistent production levels. This move is crucial as the refinery aims to reduce Nigeria’s dependence on imported refined products and improve energy security.
Adding to the challenges, reports emerged earlier this week that the Nigerian National Petroleum Company (NNPC) had halted its naira-for-crude deal with Dangote and other local refineries. This could potentially increase production costs, put more pressure on the naira, and lead to higher petrol prices. However, NNPC denied these claims, stating that negotiations for a new naira-for-crude agreement with Dangote Refinery are ongoing.
The refinery has previously voiced concerns over NNPC’s failure to meet supply commitments. Last November, Edwin Devakumar, vice-president of Dangote Industries Limited (DIL), stated, “We need 650,000 barrels per day. NNPC agreed to give a minimum of 385,000 bpd, but they are not even delivering that.”
The refinery’s struggles highlight broader issues within Nigeria’s oil sector, where production challenges and policy uncertainties continue to affect the industry’s growth. As Dangote Refinery works to reach full capacity, securing a steady and reliable supply of crude oil will be critical for its long-term success and Nigeria’s energy future.
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