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Dangote Refinery Puts Nigeria on Global Refining Map as Capacity Surges to 1.09m b/d

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…Country now top-20 for refining capacity globally

The commissioning of the country’s new 650,000 barrels per day (b/d), Dangote refinery by President Muhammadu Buhari on 22 May 2023 has put Nigeria on the global map as a top-20 nation by refining capacity.

The 650,000 b/d Dangote Refinery, the world’s largest single-train refinery, when added to state-owned NNPC’s 125,000 b/d Warri, 110,000 b/d Kaduna and 210,000 b/d Port Harcourt refineries, will push Nigeria’s total refining capacity to 1.095 million barrels per day, the largest in Africa.

Egypt, Algeria, South Africa, Nigeria and Libya were before now the major countries in Africa that accounted for 78% of the total refining capacity as of 2021, according to Globaldata.

Egypt had the highest refining capacity in 2021, with 897mbd. Other key countries in terms of refining capacity were Algeria, South Africa, Nigeria and Libya, with 675mbd, 508mbd, 471mbd and 380mbd, respectively.

Refining capacity refers to the amount of crude oil a country can process into refined products such as gasoline and diesel.

The countries with the largest refining capacity have the capability to produce significant amounts of these products and play a major role in the global oil market.

According to Reports and Data, the global oil refining market was worth $1.42 trillion in 2021 and is expected to grow to $2.22 trillion by 2030, at a compound annual growth rate of 5.1% from 2022 to 2030.

Oil-rich Nigeria is banking on the Dangote refinery to break its dependency on oil product imports.

Dangote will have “an annual refining capacity of 10.4mn t of gasoline and other petrochemicals,” according to the African Energy Chamber, citing an assessment from consultancy Hawilti that the project “could finally start rebalancing Nigeria’s trade deficit”.

The refinery could potentially displace 300,000bl/d of gasoline imports, mostly from Europe, according to Argus data, which notes the Dangote company’s plans for gasoline to account for 52% of the facility’s yield and for a surplus 25,000bl/d to be available for export.

Argus also cites the company’s stated intention to cover Nigeria’s 50,000bl/d of domestic diesel demand and to export an additional 100,000bl/d in surplus diesel production, as well as to export surplus jet fuel and kerosene volumes of 45,000bl/d and 10,000bl/d respectively.

The refinery has been designed for a wide range of crudes including most of the African crudes, a few of Middle Eastern crudes and the American Light tight oil (LTO).

Dangote refinery once operational will convert crude oil, sourced from around the globe, into various products such as gasoline, kerosene/Jet fuel, diesel, propane/LPG, Polypropylene, and other value added fuels.

Some of these products are used to produce petrochemicals used for making plastics and other products.

The initial production capacity at the refinery will be a 27.2 million tonnes a year, or 74,538 tonnes per day broken down into these specific products, according to internal data about the refinery seen by MoneyCentral.

Post completion, the refinery will become the dominant fuel supplier in Nigeria, with the ability to export to other parts of Africa, Europe and South America.

The massive new Dangote Refinery in Nigeria is also set to further transform tanker trades whenever it comes online, Gibson Shipbrokers said.

According to Gibson, “ the Dangote refinery will have a dramatic impact within the domestic Nigerian market as well as the wider tanker sector.”

Nigeria’s National Oil Company NNPC will supply at least 300k b/d of crude to the 650 k b/d refinery. This is a bold move as it will bolster domestic supply security to the new refinery and guarantee an outlet for the country’s crude.

Once fully operational it is expected to be able to fulfil the products demand of Nigeria.

This will transform the country from a net importer of products to potentially enabling it to become an exporter.

“This will mean that there will have to be an adjustment within the product tanker trade sector as well. Significant volumes of gasoline and other products are sourced from Northern European and Indian refineries. These trades are likely to come under major downward pressure once the new Dangote refinery ramps up operations,” the shipbroker added.

The NNPC took a 20% stake worth $2.76 billion in the Dangote refinery Project in 2021, valuing the refinery at $13.8 billion then.

With the capacity to produce almost 19 million barrels of oil per day, the United States has the largest refining capacity in the world.

This is followed by China (18.4 million b/d), Russia Federation (6.86 million b/d), India (5.01 million b/d) and South Korea (3.57 million b/d), to make up the top-5.

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