The Chairman of Dangote Refinery and Petrochemicals Company Limited, Aliko Dangote, has boasted that Nigeria has the potential to enhance its crude oil production capacity and effectively manage its crude supply to transition from being a net importer to a net exporter of petroleum products.
This assertion was made during his keynote address at a summit organized by the Crude Oil Refinery Owners Association of Nigeria (CORAN) in Lagos, where he was represented by the Group Executive Director of Dangote Industries Limited, Engr. Mansur Ahmed.
Despite the appraisal, he raised concerns about Africa’s reliance on imported petroleum products, saying:
“Despite producing over 3.4 million barrels of crude oil per day, Africa imports around 3 million barrels of petroleum products daily.”
He highlighted that these imports, primarily from Europe, Russia, and other regions, are projected to cost approximately $17 billion in 2023.
He asserted that Nigeria could capitalize on this situation to emerge as a net exporter of refined petroleum products, noting that both the crude oil and the petroleum products will travel shorter distances.
He added that the logistics costs of floating storage will be eliminated, and countries can purchase their petroleum product requirements just-in-time.
“Nigeria and Africa can become completely self-sufficient, and we can keep all the value on our shores. We have done it in cement, and we can certainly do it for petroleum products.”
Dangote also mentioned that the Dangote Refinery already produces sufficient diesel and jet fuel to meet Nigeria’s demand and has recently started the production of petrol, with plans to ramp up to meet national needs.
“Our refined products have been exported to diverse markets, including Europe, Brazil, the UK, the USA, Singapore, and South Korea,” he noted.
To seize the opportunity of becoming a refining hub, Dangote stressed the importance of developing a refining capacity of 1.5 million barrels per day and prioritizing domestic crude supply obligations.
He thereafter urged the government to incentivize investors, contrasting this with the Dangote Oil Refinery, which was built without any government incentives.
“It is unfortunate that while countries like Norway are putting oil proceeds into a future fund, in Africa, we are spending oil proceeds from the future,” he lamented.
Dangote highlighted the need for expanding crude oil production capacity to support new refining demands and recognized the government’s efforts under President Bola Ahmed Tinubu to achieve this through initiatives like fast-tracking IOC divestments.
“Global developments in the petroleum sector, particularly in Europe, will disrupt historical trade flows for refined petroleum products in Africa,”
“As a vibrant exporter of refined products, Nigeria will witness an improvement in its balance of trade and generate much-needed foreign currency.”
This recent development follows the Nigerian National Petroleum Company Limited’s (NNPCL) decision to end its exclusive offtake agreement with the Dangote Refinery.
This withdrawal will allow other marketers to purchase products directly.
This shift is seen as a crucial step toward a fully deregulated oil market, enabling marketers to negotiate petrol prices under a “willing buyer, willing seller” arrangement.
The recent adjustment in fuel costs, effective in August, raised pump prices significantly, marking a critical moment in Nigeria’s oil market evolution.