Aliko Dangote’s Refinery, Dangote Refinery, is excitedly awaiting its first batch of crude oil, which is expected to arrive in June 2023. According to a report from S&P Global Commodity Insights released on May 16, the refinery is preparing for the processing of this initial batch, which consists of 500,000 barrels per day (b/d). They plan to gradually increase production to 650,000 b/d by mid-2024. President Buhari is scheduled to officially commission the Dangote Refinery on May 22 2023.
The report also mentions that a significant amount of crude oil for the refinery will be sourced from Nigeria. Nigeria has the capacity to produce 2.5 million b/d, but various challenges like insecurity, theft, strikes, and issues with aging wells have limited their daily output to 1.2 million b/d.
How Dangote Refinery Will Impact Nigeria Oil Production
The Dangote Refinery, currently in the final stages of construction in Ibeju-Lekki, Nigeria, will have a significant impact on the country’s oil market. It is expected to produce Euro 5 compliant gasoline, diesel, and polypropylene. The company’s data suggests that petrol production, which is currently close to zero, will rise to 249,000 b/d by 2026 and surpass 300,000 b/d by 2033. This will result in a decrease in petrol imports to 154,000 b/d by 2026.
Considering Nigeria’s projected population growth, imports are expected to exceed domestic production again by 2042. Interestingly, Nigeria will begin exporting gasoil in the following year, with production estimated to increase from 3,500 b/d in 2023 to 211,000 b/d in 2027.
Experts from S&P anticipate that Nigeria’s crude oil production will remain stable at around 1.3 million b/d over the next decade. However, the startup of the Dangote Refinery is likely to have a significant impact on oil exports. In 2023, Nigeria is expected to produce 1.46 million b/d and export 1.45 million b/d. By 2027, despite a slight decline in production to 1.30 million b/d, oil exports are forecasted to drop to 656,000 b/d due to the influence of the Dangote Refinery.
Three Things Nigerians Can Expect From Refining Its Own Oil Through Dangote:
- The Dangote Refinery is predicted to play a crucial role in Nigeria’s economic growth by meeting the country’s domestic demand for various liquid products like PMS, diesel, polypropylene, kerosene, and aviation jet fuel.
- The lingering subsidy that has been swallowing a chunk of the national budget will slowly be eliminated. Oil importation will be reduced drastically.
- Other interconnected downstream sectors can benefit fully making the oil available to Nigerians