By Stellamaries Amuwan
The failure to supply crude oil to domestic refineries, including the multi-billion dollar Dangote Refinery, has stalled the production of refined petroleum products at the facilities.
This is also as the 650,000 barrels per day Dangote refinery in Lagos missed the October production projection it had earlier set.
The October production target miss made it the second time in 2023 that Dangote Refinery would raise hopes of Africa, especially Nigeria, of a possible end to petrol importation. However, the failure to begin production means that Nigeria will continue to rely on fuel importation.
It was gathered on Wednesday that amid Nigeria’s continued imports of refined petroleum products, its domestic refineries that would have helped refine the commodities were being starved of crude oil.
About five more modular refineries are ready to commence the production of refined petroleum products but cannot produce the commodities because of the unavailability of crude oil, according to industry sources.
Also, industry sources stated that the Dangote Refinery in Lekki, Lagos, had yet to receive the required volumes of crude oil needed to produce refined products.
On September 20, 2023, it was reported that the Dangote Petroleum Refinery was importing crude oil and expected its first cargo in about two weeks, according to the Executive Director, Dangote Group, Devakumar Edwin.
The report stated that though the Nigerian National Petroleum Company Limited trades crude oil on behalf of Nigeria, in an interview with S&P Global Commodity Insights at the time, Edwin revealed that the NNPCL had committed its crude to other entities.
The Dangote refinery boss did not disclose the other entities receiving the oil company’s crude, but the NNPCL had earlier disclosed in August that it had entered into a $3bn crude oil-for-loan deal with African Export-Import Bank.
The deal allowed the company to pledge future oil production to the bank as repayments for the loan.
Also, Edwin pointed out that the importation of crude by the Dangote refinery was temporary, as the firm would receive supply from NNPCL from November.
Edwin went ahead to state that the firm would begin the production of up to 370,000 barrels per day of crude that would give rise to Automotive Gas Oil, popularly called diesel, and jet fuel in October 2023.
For petrol, the Dangote Group’s boss said the plant would produce it by November 30, 2023.
He said, “Right now, we are ready to receive crude. We are just waiting for the first vessel. And so as soon as it comes in, we can start.”
However, despite the promise to begin production in October, there seemed to be no traces of diesel refining from the facility in October.
The facility was initially billed to begin refining in August, as announced by the President of Dangote Group, Aliko Dangote, at the inauguration of the Ibeju-Lekki facility in May.
“Your excellencies, distinguished guests, our first product will be in the market before the end of July or beginning of August this year,” Dangote had said.
However, it was gathered on Wednesday that the crude oil supply situation to the plant had not improved, as the NNPCL was still finding it tough to provide the crude oil required for the Dangote refinery to commence the production of refined products.
Sources at the Nigerian Upstream Petroleum Regulatory Commission and Federal Ministry of Petroleum Resources confirmed this in Abuja on Wednesday.
“Officials from the Dangote Refinery visited the NUPRC recently to complain about the lack of crude oil required by the plant and why it would be odd for the company to be importing crude when Nigeria produces the commodity,” one of the sources, who pleaded not to be named due to lack of authorisation, stated.
Efforts to get the reaction of the Dangote refinery were unsuccessful, as two spokespersons for the firm did not answer calls to their mobile phones. They also did not respond to text messages sent to them on the matter.
Although the Federal Government blamed the development on Nigeria’s low oil output, operators of domestic refineries raised concerns about the lack of feedstock (crude) for their refineries and how this was stalling the take-off of these plants.
Operators of the modular refineries confirmed on Wednesday that International Oil Companies preferred exporting the commodity to earn dollars, to the detriment of domestic refiners.
The NUPRC had on Saturday announced that more domestic refineries had issued notice to commence the production of refined petroleum products.
It also announced its readiness to enforce domestic crude oil supply obligations that would ensure the availability of crude to indigenous refiners.
Senior officials from the Federal Ministry of Petroleum Resources, the NUPRC, and the Crude Oil Refinery Owners Association of Nigeria further confirmed that the number of local refineries set to commence production was about five.
Modular refinery operators under the aegis of CORAN revealed that feedstock supply had remained a severe bottleneck.
They also told one of our correspondents that the three modular refineries currently in operation hardly have adequate volumes of crude.
CORAN is a registered association of modular and conventional refinery companies in Nigeria. Modular refineries are simplified refineries that require significantly less capital investment than traditional full-scale refineries.
