Dangote Refinery Diesel Output to Help Ease Global Crunch

The Dangote Petroleum Refinery and Petrochemicals (DPRP) plant, an integrated crude oil refinery and petrochemical plant, built in Lagos Nigeria, will help ease a global diesel supply crunch, amid surging demand.

The Dangote refinery will have crude oil processing capacity of 650,000 barrels per day (bpd), that will convert crude oil into numerous value-added fuels and other products.

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).

The initial production capacity at the refinery will be a 27.2 million tonnes a year, or 74,538 tonnes per day, of which diesel output will be equivalent to 15,197 tonnes per day (5.54 million tonnes a year), once production ramps up, according to internal data about the refinery seen by MoneyCentral.

That would be relief for global diesel consumers caught up in geopolitics, and world oil refiners proving powerless to make enough of the product.

“We’re at risk of seeing continued tightness in the market, especially for distillates, coming into the winter months,” said Toril Bosoni, head of the oil market division at the International Energy Agency (IEA), referring to the category of fuel that includes diesel. “Refineries are struggling to keep up.”

Soaring prices pushed US diesel prices above $140 to the highest ever for this time of year last week, while Europe’s equivalent has soared 60% since summer.

Russia — still a major supplier to the world despite Western sanctions — has indicated that it’s looking to limit the volume of the fuel it sends to global markets.

European refineries have also reportedly been unable to build up supplies over the summer because of widespread unplanned outages which has left inventories tight ahead of winter.

Meanwhile, the IEA’s monthly report last week anticipated consumption growing by about 100,000 barrels a day this year.

The Dangote Refinery which was commissioned in 2023, has gradually ramped up with a target to operate at full capacity from 2024 onward.

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.

It’s relatively high Nelson complexity index of 9.5 results from its capability to refine crude into mostly high value products, providing it a strong competitive edge against older refineries around the globe.

The refinery has flexibility to direct most of its jet fuel / kerosene output into its diesel production if desired and can regulate its output between gasoline and diesel to better match market demand.

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.

The Dangote refinery has been designed to process 12 crudes with a focus on three Nigerian grades – Escravos, Bonny Light and Forcados.

The new refinery is the largest in Africa and the world’s largest singletrain facility.