Dangote Refinery Delays Petrol Production Again Amid Crude Supply Issues
The much-anticipated rollout of petrol from the Dangote Petroleum Refinery, initially expected to begin on Monday, has been delayed once again, raising concerns among marketers and the public. The refinery, which has a capacity of 650,000 barrels per day, was slated to start production between August 10 and 12, 2024, according to earlier projections by Alhaji Aliko Dangote, President of the Dangote Group.
However, sources close to the refinery revealed that while the refinery is fully prepared to begin production, it will likely not meet the Monday deadline. Instead, the refinery is expected to start rolling out Premium Motor Spirit (PMS) before the end of August, despite ongoing challenges related to crude oil supply.
A top official, speaking anonymously, confirmed that all preparations are in place, but the continuous operation of the refinery depends on a steady supply of crude oil. The official noted, “The refinery cannot stop for one minute; it needs a constant supply of crude to keep going.”
The delay is largely attributed to a crude supply crisis that has plagued the refinery since its operations began. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) had allocated 29 million barrels of crude oil to the refinery, but as of now, the refinery has yet to receive this supply. The NUPRC claims that it facilitated the supply of these barrels between January and June 2024, but the Dangote Group disputes this, stating that they have not received the cargoes.
Due to the crude supply issues, the refinery may face challenges in selling petrol locally. Experts suggest that the current pricing offered by the Nigerian National Petroleum Company Limited (NNPCL) is not competitive, which could force Dangote to consider exporting the product rather than selling it in Nigeria at a loss.
Petroleum marketers in Nigeria are anxiously waiting for the refinery to commence petrol production. Clement Isong, Executive Secretary of the Major Energies Marketers Association of Nigeria (MEMAN), confirmed that while they are currently purchasing diesel and aviation fuel from the Dangote refinery, they have not yet been able to buy PMS.
The crude supply crisis has also sparked broader concerns about the impact on Nigeria’s economy and currency. Experts and industry stakeholders are urging the NNPC and International Oil Companies (IOCs) to expedite the supply of crude oil to local refineries to stabilize the market and reduce pressure on the naira.
Despite the challenges, Dangote Group remains committed to starting petrol production this month, but the situation underscores the complexities and hurdles facing Nigeria’s domestic oil refining sector.
