Officials at the Dangote refinery recently disclosed that the refining capacity of the facility is currently at 500,000 barrels per day, as they project hitting the 650,000bpd mark by June of this year.
What has been a major barrier between the refinery and its originally intended 650,000bpd capacity is set to be resolved.
The refinery announced that it has plans to import crude from outside the Nigerian oil market, as the supply it currently gets from the country is insufficient.
Should the refinery plug its local crude deficit with imported crude, it is likely to ramp up production to 650,000bpd.
The sources, who spoke in confidentially, as reported by the Punch relayed that the refinery will need to buy additional oil to reach its goal, even if they confirmed that the naira-for-crude contract is still in place as instructed by President Bola Tinubu last year.
Currently, the Nigerian National Petroleum Cooperation (NNPC) distributes between 350,000bpd to 450,000bpd of crude to the Dangote refinery.
“It is not that anybody is saying NNPC cannot do it. No! But you look at what we have. We are not a 200,000bpd refinery. We are talking about 650,000 barrels,” one of the anonymous sources who spoke to the Punch said.
“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.”
Dangote and the NNPC
Last year, the Dangote refinery and the NNPC got into a bit of a debacle as several disputes hindered local production of premium motor spirits (petrol).
The Dangote refinery, which is the first functional refinery of Africa’s largest oil producer in decades was set to alter the Nigerian oil market with an adequate supply of fuel products.
Unfortunately, this was hindered owing to the squabble between the NNPC and Dangote over an adequate supply of crude.
The Dangote refinery accused the NNPC of preventing the refinery from accessing locally produced crude by either selling it over market price, in US dollars rather than Naira, or claiming that it was unavailable.
At the time, the Dangote refinery was compelled to acquire oil from the international market, which included Brazil and the United States, at a high cost.
This led Dangote to speed up his objective of initiating crude production at its two Niger Delta upstream projects in Oil Mining Leases 71 and 72, starting with around 20,000 barrels per day and scaling up further in the first quarter of 2025.
Naira-to-crude
The federal government initiative to sell its crude oil to Dangote Refinery and other refineries in its local currency, the naira, commenced on October 1, 2024.
The naira-to-crude program, which has already begun, denotes that crude would be sold to the Dangote refinery and others in naira, in exchange, the Dangote refinery will deliver PMS (petrol) and diesel of similar value to the domestic market, both in naira.
The Minister of Finance, Wale Edun, confirmed the commencement of this policy in a signed statement on October 5, 2024.
