To become a net exporter of petroleum products, Nigeria on Monday commissioned the Dangote Refinery.
The refinery, according to the administration of outgoing President Muhammadu Buhari, is the solution to Nigeria’s ongoing fuel shortages,
Nigeria spent $23.3bn last year on petroleum product imports and consumes around 33 million litres (8.7 million gallons) of petrol daily.
The project, launched in 2017, is located in the Lekki area of Lagos State, off the Atlantic Ocean has a capacity of 650,000 barrels per day.
The facility is intended to export surplus petrol, transforming Africa’s largest oil producer into a center for the export of petroleum goods.
Speaking at the commission ceremony, Aliko Dangote, the richest man in Africa, who provided the funding for the refinery’s development, said the priority was to ramp up production to ensure the refinery could fully satisfy Nigerian demand and eliminate “the tragedy of import dependency”.
The ceremony was attended by President Buhari.
Dangote expects to begin refining crude in June, but London-based research consultancy Energy Aspects said that commissioning was an intricate process and that it expects operations to start later this year, reaching 50-70 percent next year, with a staggered process of other units into 2025.
The refinery needs a constant supply of crude, but Nigeria’s oil production has been declining due to oil theft, vandalism of pipelines, and underinvestment.
In April, production fell under one million barrels per day (bpd), below Angola’s output.
Lower production would affect the ability of state-owned oil company Nigerian National Petroleum Corporation (NNPC) to fulfil an agreement to supply Dangote Refinery with 300,000 bpd of crude, said economist Kelvin Emmanuel, who authored a report on oil theft last year.
NNPC, with a 20 percent stake in the refinery, has production-sharing agreements with oil majors like ExxonMobil, Shell, and Eni and is entitled to a portion of the crude, which it also swaps with traders for petrol and diesel.
Energy Aspects, however, said that in the long run, the Dangote Refinery could end Nigeria’s petrol deficit, reshape the Atlantic basin petrol market, and export diesel that meets European Union specifications.
