After seven years of construction, Africa’s biggest oil refinery, owned by the Dangote Group, is now open in Nigeria and hopes are that it will alleviate chronic fuel shortages.
Built at a N$366 billion cost, the refinery is owned by Africa’s richest man, Aliko Dangote, and has the capacity to produce about 650 000 barrels of petroleum products per day, more than enough to supply the country’s needs.
According to a report by credit rating agency S&P Global last week, not only will this refinery attend to fuel shortages in Nigeria, once operational it is expected to make Nigeria a net exporter of refined products.
A Dangote Group spokesperson told S&P Global the refinery expects to process its first crude batch next month.
The Nigerian National Petroleum Corp., which has acquired a 20% stake in the refinery, is expected to supply 300 000 barrels per day (b/d) of crude to the project, while nearby oil producers such as Angola and Chad also hope to contribute.
It is not clear how this will feed into the southern African fuel industry, but importers of fuel into Namibia always look for cheaper oil.
Nigerian crude is reportedly sweet, meaning it can be fairly easily converted into fuel, and attracts a range of customers in Europe and Asia.
The Dangote refinery will produce Euro 5 specification gasoline and diesel, as well as polypropylene.
According to an S&P report, the refinery also hopes to supply other African countries that currently import fuel from Europe and the United States.
“This will have a big impact,” a trader told S&P Global, adding that Nigeria could supply South Africa and Latin America with refined products.
However, some have questioned whether Nigeria has the ports and logistical capabilities to export refined products over long distances.
“Dangote has huge potential. I just do not know how they will handle it. Logistics might be tough on them to maximise the results,” said another trader.
Lagos-based FBNQuest analyst Uwadiae Osadiaye countered that the Dangote Group already exports fertiliser to Latin America and has a distribution network across west and central Africa for cement.
“This is a game-changer for the Nigerian people,” said president Muhammadu Buhari, who inaugurated the plant which also includes a power station, deep seaport and fertiliser plant.
Nigeria’s existing refineries have been completely shut down for over three years owing to oil theft, pipeline vandalism and structural neglect.
Namibia annually imports over N$1 billion worth of fuel every month, with fuel consumption last year closing at 800 million litres.