Exclusive: Nigeria brings major Dangote refineries to life with its oil supply. Three industry sources with knowledge of the situation claimed that Nigeria’s state oil company, NNPC Ltd., will deliver up to six crude oil cargoes in December for test runs for the new 650,000 barrel-per-day Dangote oil refinery.
Aliko Dangote, the richest man in Africa, is funding the refinery, which would change the way oil is traded in the Atlantic Basin and create a profitable market for fuels made in the US and Europe that have long-powered cars, trucks, and generators throughout the continent.
Situated close to Lagos in the Lekki free trade zone is the refinery. Once operational, it would let oil-producing giant Nigeria become a net fuel exporter—a long-awaited objective for the OPEC member nearly entirely dependent on imports.
Six cargoes, or 200,000 bpd, will be provided in December as part of a one-year arrangement, according to one of the sources, an anonymous NNPC official, who also stated that amounts in subsequent months would be given “based on mutual agreement and availability.”
According to the other sources, at least 130,000 bpd, or around 4-5 cargoes, were scheduled. When questioned about the NNPC supply arrangement, a Dangote Group official—who wished to remain anonymous—said, “Some of the agreements have confidentiality clauses,” without providing further details.
The NNPC representative stated that separate contracts for procuring gasoline and diesel from the refinery will be discussed later. NNPC owns 20% of the refinery.
After years behind schedule and exceeding earlier predictions of $12–14 billion in cost, the refinery started the commissioning process in May of this year.
Testing and ensuring that the many units that produce anything from gasoline to diesel react to the control panels is part of commissioning. According to experts, refineries may need several months to transition from pilot projects to full-scale production of premium fuels.
As the refinery gets closer to total capacity, the value of the fuels it produces will steadily increase, according to Jeremy Parker, head of business development at the oil consultant CITAC, which focuses on Africa.
“You’d need to keep feeding (the refinery) at a rate of around 325,000 bpd, about 10 cargoes a month,” Parker explained. “Once they ramp up in subsequent phases to 650,000 bpd, that figure climbs, of course, but initially they’d be expected to run around 325,000 bpd.”