The Dangote Petroleum Refinery, with a capacity of 650,000 barrels per day, is leveraging cheaper oil imports from the United States for approximately one-third of its feedstock as it commences production, according to a report by Bloomberg.
Analysts anticipate that the refinery’s output will significantly impact the gasoline market in both Nigeria and the region. Alan Gelder, Vice President of Refining, Chemicals, and Oil Markets at Wood Mackenzie, remarked that Dangote’s influence on the Atlantic Basin gasoline markets will be felt throughout the summer and beyond, especially when the residue fluid catalytic cracking unit (RFCC) comes online, altering the West African gasoline supply balance.
Currently, the refinery is operating at approximately 300,000 barrels per day, nearly half of its nameplate capacity, as estimated by analysts at Wood Mackenzie, FGE, and Citac.
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It has begun shipping jet fuel, gasoil, and naphtha while preparing for gasoline production.
Wood Mackenzie anticipates the gasoline-focused units to commence operations this summer, while other analysts project the RFCC to be operational by the end of the year.
Dangote Industries announced earlier in the month that gasoline deliveries would start in May.
Meanwhile, the refinery recently announced a reduction in the price of diesel from N1,200/litre to N1,000/litre, aiming to positively impact the economy and reduce inflation rates in the country.
Bloomberg reports that a significant portion of the oil shipped to the refinery has been US-grade WTI Midland, underscoring the potential for continued reliance on foreign oil if it remains more cost-effective than local supplies.
However, Nigeria’s new regulations mandate oil producers to prioritize selling crude to domestic refineries, aiming to reduce the country’s dependence on imported refined products.
Additionally, the government has allowed refineries to purchase crude using either the local currency or the US dollar.
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