Nigeria’s Refining Potential: Dangote Highlights Emerging Opportunities
At the Crude Oil Refinery Owners Association of Nigeria (CORAN) summit in Lagos, Aliko Dangote, represented by Mansur Ahmed, Advisor to the President/CEO of Dangote Industries Limited, emphasized Nigeria’s transformative journey from being a net importer of petroleum products to becoming a key global player in refining and downstream trade. According to Dangote, this shift, coupled with significant new refining capacities, places Nigeria on the verge of self-sufficiency in refined petroleum products, with the potential to be a formidable exporter.
Dangote credited President Bola Tinubu’s strong support for the progress in the sector, pointing out that by 2025, around 1.8 million barrels per day (mbd) of new refining capacity will come online globally, with the Dangote Refinery being a crucial part of that growth. He also noted that Nigeria’s refining capability is set to expand alongside other global refineries in countries such as Mexico, Kuwait, China, and Bahrain.
Global Shifts and Africa’s Opportunity
The global refining landscape is changing due to stricter environmental regulations in Europe, such as bans on low-quality petroleum products in Holland and Belgium, and rising carbon tariffs. Simultaneously, an aging population and the adoption of electric vehicles (EVs) are curbing gasoline demand growth in developed countries, with most future demand expected from developing regions, especially Africa.
Dangote explained that, as a result of these trends, refineries in Europe and China are being pressured by reduced margins. He cited an analysis from Wood Mackenzie predicting that around 3.6 mbpd of refinery capacity could shut down in the coming years, including Scotland’s Grangemouth refinery and Shell’s conversion of a German refinery into a lubricant plant.
Nigeria’s Strategic Position
Africa imports around 3 million barrels of petroleum products daily, yet the continent produces about 3.4 million barrels per day of crude oil. According to Dangote, this disparity presents a unique opportunity for Nigeria, as refined products imported by African countries can instead be supplied from within the continent, particularly Nigeria, which would significantly reduce logistics costs and keep the value chain closer to home.
Dangote affirmed that the Dangote Refinery already produces sufficient diesel and jet fuel to meet Nigeria’s domestic needs and has started producing Premium Motor Spirit (PMS), with plans to scale up. These products are also being exported to global markets, including Europe, Brazil, the UK, and the USA.
Challenges and the Way Forward
For Nigeria to fully capitalize on this opportunity, Dangote emphasized the need to build an additional 1.5 million barrels per day of refining capacity. Achieving this goal will require robust government support, ensuring sufficient crude oil supply, and prioritizing domestic crude supply obligations. Dangote warned against “mortgaging crude,” citing the importance of using oil proceeds for future investments rather than immediate spending.
He also highlighted the need to expand crude oil production capacity, which the Tinubu administration is addressing through initiatives such as fast-tracking international oil company (IOC) divestments. With global disruptions to petroleum trade flows, Nigeria is well-positioned to seize the moment and bolster its refining capacity to become a major exporter of refined products.
If industry stakeholders and government align their efforts, Dangote believes Nigeria could enhance its balance of trade, generate much-needed foreign currency, and solidify its place as a refining hub in Africa and beyond.
Source: CORAN
