According to business magnate Aliko Dangote, Nigeria’s expanding refining capacity can transform the nation into Africa’s refining hub, saving the continent billions in energy costs.
Aliko Dangote emphasizes that Nigeria needs to boost its crude oil production capabilities and efficiently manage its supply to provide sufficient feedstock for domestic refineries. This step is essential for transitioning the country from being a net importer to becoming a net exporter of petroleum products.
The Chairman of Dangote Refinery and Petrochemicals Company Limited expressed this viewpoint in his keynote address at a summit organized by the Crude Oil Refinery Owners Association of Nigeria (CORAN) in Lagos.
He was represented at the event by Engr. Mansur Ahmed, Group Executive Director of Dangote Industries Limited. The gathering attracted top government officials and key stakeholders from the midstream and downstream sectors.
Regarding Nigeria’s potential to become a refining hub, Dangote voiced concern that despite the country’s production of over 3.4 million barrels of crude oil per day, Africa still imports approximately 3 million barrels of petroleum products each day.
He mentioned that these imports, mainly originating from Europe, Russia, and other areas, are projected to amount to around $17 billion in 2023.
He mentioned that Nigeria has the potential to become a net exporter of refined petroleum products by capitalizing on this situation, as it would allow for more competitive market servicing directly from within the country.
Both crude oil and petroleum products will have reduced transportation distances, eliminating the logistics costs associated with floating storage. Countries can meet their petroleum product needs on a just-in-time basis. This shift allows Nigeria and Africa to achieve complete self-sufficiency, retaining all value domestically. We’ve successfully accomplished this in the cement industry, and we are fully capable of doing it for petroleum products as well.
He highlighted that the Dangote Refinery is already producing enough diesel and jet fuel to satisfy Nigeria’s demand. They have recently begun PMS production and plan to increase output soon to meet domestic needs. Additionally, their refined products have been exported to various markets such as Europe, Brazil, the UK, USA, Singapore, and South Korea.
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Dangote highlighted the importance of Nigeria establishing a refining capacity of 1.5 million barrels per day and focusing on domestic crude supply obligations to capitalize on this opportunity. Recognizing current and future challenges, he encouraged the government to offer incentives for investors, noting that unlike his Dangote Oil Refinery, which was constructed without such support from the government.
“It is regrettable that, unlike countries such as Norway which invest their oil revenues into future funds, we in Africa are utilizing oil proceeds ahead of time. We must also prioritize enforcing domestic crude supply obligations and work on increasing our crude oil production capacity to meet the demands from new refining infrastructure. The administration under President Bola Ahmed Tinubu is actively working towards this goal by accelerating IOC divestments and implementing other strategic initiatives,” he stated.
Highlighting the impending disruption of historical trade flows for refined petroleum products in Africa due to global developments in the petroleum sector, especially in Europe, Dangote remarked that Nigeria is exceptionally well-positioned to seize this opportunity and emerge as a key player on the global oil stage. He urged stakeholders to engage in consultation, collaboration, and cooperation.
“As an active exporter of refined products, Nigeria is set to see a boost in its trade balance and earn essential foreign currency. There is no doubt about Nigeria’s potential as a refining hub; let’s collaborate to turn this vision into reality,” he urged.
The leading industrialist observed that the summit’s theme, “Making Nigeria a Net Exporter of Petroleum Products,” would have appeared improbable just a few years back. He further pointed out that despite being Africa’s top crude oil producer, Nigeria has traditionally depended on imports to satisfy its demand for refined petroleum products.
He highlighted that the Dangote Petroleum Refinery and Petrochemicals is set to change Nigeria’s status from a “net importer” to a “net exporter” of refined petroleum products. This positions the country as an emerging force in global downstream trade flows, with its refined products already being exported to diverse markets such as Europe, Brazil, the UK, USA, Singapore, and South Korea.
