Nigeria to Power Dangote Refinery With Own Oil, Reducing Imports
The Nigerian National Petroleum Company (NNPC) Limited is expected supply the new 650,000 barrel per day capacity Dangote oil refinery with up to six cargoes of crude oil in December for test runs.
One of the three industry sources with knowledge of the situation, who spoke with Reuters, said that six cargoes, or 200,000 bpd, would be supplied in December as part of a one-year deal, adding that volumes in future months would be supplied “based on mutual agreement and availability.”
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According to other sources, 4-5 cargoes, or at least 130,000 bpd, were planned. When queried about the NNPC supply arrangement, a Dangote Group representative who did not want to be identified remarked, “some of the agreements have confidentiality clauses,” without elaborating. NNPC owns 20 percent of the refinery.
The refinery began commissioning in May of this year, years behind schedule and at a cost of $19 billion, well over earlier predictions of $12-14 billion.
Earlier today, the Nigerian government announced its commitment to prioritise domestic crude oil refining in companies like Dangote refinery, citing the staggering $74.6 billion spent on petrol exports from 2006 to 2021.
Gbenga Komolafe, the Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), made this declaration during a high-level meeting with oil producers in Abuja on Wednesday.
He said: “We all understand that if we can meet our refining obligation, we will be able to impact largely on our economy and the attendant cost of pricing the refined product.”
He emphasised the importance of Nigeria becoming a net exporter of refined products, pointing out that the Petroleum Industry Act (PIA) has provisions addressing this issue.
“Good enough, we have the largest refinery in Africa, the Dangote refinery. It is ready to start operation. We have received a request from the company to guarantee feedstock to the refinery, and we believe, as a nation, it will be a shame if we cannot meet up with the feedstock.”
