Dangote refinery turns to U.S. crude amid local supply challenges

The Dangote Petroleum Refinery, one of Africa’s largest refineries, is set to receive 12 million barrels of crude oil from the United States, as the facility grapples with inadequate local crude supply. The shipment is expected to arrive in February, according to industry reports.

The $20 billion refinery, located in Lekki, Lagos, aims to reach its full refining capacity of 650,000 barrels per day (bpd) by June 2025. However, its ambitious production targets have been hindered by supply limitations from the Nigerian National Petroleum Company Limited (NNPC), which currently provides only 350,000bpd of the 450,000bpd designated for domestic consumption.

In a bid to bridge this gap, Dangote Refinery has turned to international markets. This move is part of a broader strategy to ensure consistent feedstock for its operations, with officials confirming that current production has ramped up to 500,000bpd.

“Currently, we are at 500,000bpd; we will ramp to 650,000 by midyear. You know what it means? So, it is a normal process to source crude oil anywhere it is available,” an official at the plant disclosed.

The refinery’s increasing dependence on imported crude has prompted infrastructural expansion. Eight additional storage tanks are being built, increasing the refinery’s crude storage capacity by 41.67 per cent to accommodate 3.4 billion liters. According to Devakumar Edwin, Vice President of Oil and Gas at Dangote Industries, “Importing crude from other countries instead of buying locally means that our crude stockpiles will have to be higher.”

The supply bottlenecks highlight broader challenges in Nigeria’s oil sector. Despite President Bola Tinubu’s directive in 2023 for NNPC to sell crude oil to local refineries in naira, the state-owned corporation has struggled to meet the refinery’s daily requirement of 550,000 barrels of Nigerian crude. The ongoing naira-for-crude arrangement, which initially prioritized Dangote Refinery, may soon extend to other refineries, including the Port Harcourt and Warri facilities, once they become fully operational.

The refinery has also issued long-term tenders to secure consistent crude imports. In May 2024, it began purchasing two million barrels of West Texas Intermediate Midland crude monthly, amounting to 24 million barrels over a year. Currently, the refinery supplies petrol, diesel, and aviation fuel to both local and international markets.