Nigeria-Dangote Refinery Poised for Operation, Receives Initial 1 Million Barrels of Crude Oil Feedstock

The eagerly anticipated Dangote Refinery, situated near Lagos, Nigeria marked a significant milestone as it received its inaugural shipment of crude oil feedstock—approximately one million barrels—from the Nigerian National Petroleum Company Limited (NNPC) yesterday.

According to an S&P Global Commodity Insights report, the cargo, intended for the 650,000 barrels per day facility, finally arrived after years of delays and setbacks. The OTIS tanker, transporting the crude, loaded a cargo of 950,000 barrels of Nigeria’s Agbami crude on December 6. The vessel is en route to Lekki, the nearest land port to Dangote’s offshore crude receiving terminal, as indicated by the S&P Global MINT tanker tracking platform. The report stated that it was expected to arrive on December 7 around 1900 GMT.

This Suezmax tanker, chartered by the state-owned NNPC, represents the initial crude supply for Dangote’s expansive new plant as it gears up for full-scale operations, according to insights from a West African oil trader.

Despite the refinery’s official completion in May, it has yet to produce any oil products, mainly due to a shortage of domestic crude feedstock. NNPC, owning a 20 percent stake in the refinery, recently committed to supplying six million barrels of crude oil as feedstock to Dangote in December, according to company sources on November 5.

Agbami, operated by Chevron, stands as one of Nigeria’s largest deepwater developments, pumping around 100,000 barrels per day in the central Niger Delta. The initially supplied crude feedstock is slated for test runs, ensuring the refinery’s units efficiently produce various products, from petrol to diesel.

Experts caution that the transition from test runs to full-capacity production of high-quality fuels could span several months. Aliko Dangote, Africa’s wealthiest individual, constructed the refinery with the expectation that it would revolutionize oil trading in the Atlantic Basin, reshaping the fuel supply dynamics in Africa.

Situated in the Lekki Free Trade Zone (FTZ), the refinery, once fully operational, aims to transform Nigeria into a net exporter of fuels—a longstanding national objective. S&P Global reports that NNPC has chartered additional tankers to transport further crude shipments from Nigerian offshore fields to the refinery later this month, citing an oil trader.

Despite facing repeated delays since its 2013 unveiling, the Dangote Refinery, with key units installed in 2019, is equipped to process three Nigerian crude grades: Escravos, Bonny Light, and Forcados. When fully operational, the facility is expected to yield significant daily outputs of petrol, gasoil, diesel, jet fuel, and kerosene, along with substantial annual production of propane and Liquefied Petroleum Gas (LPG).

Nigeria hopes that the Dangote refinery will mitigate its dependence on petrol imports, currently necessitated by the poor state of existing refineries, all of which are presently closed for repairs. Dangote officials, in discussions with S&P Global Commodity Insights, have indicated initial operations at 370,000 barrels per day, primarily focusing on jet fuel and diesel. However, S&P Global analysts anticipate that the refinery may not achieve full operating capacity until mid-2025, with potential for further delays.

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