Dangote Refinery expects its first crude batch in June 2023. The refinery, which is owned by Nigerian billionaire Aliko Dangote, is currently under construction in the Lekki Free Zone, Lagos State, and is expected to be the largest single-train refinery in the world upon completion. According to a report released on May 16 by S&P Global Commodity Insights, the Dangote refinery is anticipating the arrival of its first crude batch in June 2023.
A representative from the refinery revealed that they expect to commence processing this initial batch, consisting of 500,000 barrels per day (b/d), before gradually increasing production to 650,000 b/d by mid-2024. The official commissioning of the Dangote refinery by President Buhari is scheduled for May 22.
The report also highlights that a significant portion of the crude oil for the refinery will be sourced from Nigeria, a country with a production capacity of 2.5 million b/d. However, Nigeria has faced challenges in surpassing a daily output of 1.2 million b/d due to issues such as insecurity, theft, strikes, and operational problems related to aging wells.
Based on reports from S&P Global Commodity Insights, the Dangote refinery is set to manufacture Euro 5 compliant gasoline, diesel, and polypropylene. The company’s data indicates that motor gasoline (petrol) production is projected to rise from nearly zero currently to 249,000 barrels per day (b/d) in 2026 and exceed 300,000 b/d by 2033. Additionally, the report states that petrol imports will decrease by over half to 154,000 b/d by 2026.
Furthermore, with Nigeria’s expected rapid population growth in the coming decades, the data suggests that imports will once again surpass domestic production by 2042. Notably, starting from the following year, Nigeria will begin exporting gasoil for the first time, with production anticipated to increase from 3,500 b/d in 2023 to 211,000 b/d in 2027.
According to S&P analysts, Nigeria’s crude production is expected to maintain stability at approximately 1.3 million b/d over the next ten years. However, the start-up of the Dangote refinery is anticipated to have a significant impact on oil exports. The forecast indicates that in 2023, Nigeria is projected to produce 1.46 million b/d and export 1.45 million b/d. However, by 2027, despite a slight decline in production to 1.30 million b/d, oil exports are forecasted to drop to 656,000 b/d. This decline in exports can be attributed to the operational influence of the Dangote refinery.
Dangote Refinery Role in Driving Economic Growth
Dangote refinery is anticipated to play a significant role in driving economic growth in Nigeria by fulfilling the entire domestic demand for various liquid products. This includes essential commodities like gasoline, diesel, polypropylene, kerosene, and aviation jet fuel.
In addition, the refinery is expected to create significant job opportunities and support the growth of other industries. According to the Dangote Group, the refinery is expected to create approximately 250,000 direct and indirect jobs, while also supporting the growth of other industries such as agriculture, transportation, and power.
The refinery is also expected to boost Nigeria’s export earnings, as it will produce refined petroleum products that can be exported to other countries. This is a significant shift from Nigeria’s current status as a net importer of refined petroleum products.
The construction of the Dangote refinery has not been without its challenges, including delays and cost overruns. The project was initially expected to be completed by 2019 but faced multiple setbacks, including funding issues, COVID-19 disruptions, and logistical challenges.
In conclusion Dangote Refinery’s anticipated arrival of the first crude batch in June 2023 is a significant development for Nigeria’s oil industry and the country’s economy as a whole. The refinery’s production capacity, expected job creation, and potential to reduce Nigeria’s reliance on imported petroleum products make it a vital contributor to the country’s economic growth and development. Moreover, the refinery’s expected impact on Nigeria’s oil exports is set to shape the country’s position in the global energy market for years to come.