Dangote refinery ramps up production with US crude – Report

The 650,000 barrels per day Dangote Petroleum Refinery is taking advantage of cheaper oil imports from the United States for as much as a third of its feedstock as it starts up production.

A report by Bloomberg on Thursday stated that the plant has been shipping products in recent weeks while readying two units to enable gasoline (petrol) output that will deliver a long-promised transformation of the fuel market both in Nigeria and the region. It attributed this to analysts.

“Dangote is going to influence Atlantic Basin gasoline markets this summer and for the rest of the year,” said Alan Gelder, Vice President of Refining, Chemicals, and Oil Markets at the consultancy firm, Wood Mackenzie.

He added, “When the RFCC comes online, that’ll really shake things up because it alters the West African gasoline supply balance,” referring to a residue fluid catalytic cracking unit that upgrades heavier products.

The refinery is running at about 300,000 barrels per day, nearly half its nameplate capacity, according to the average estimate of analysts at WoodMac, FGE, and Citac.

The complex has started shipping jet fuel, gasoil, and naphtha as it widens to a full slate of products.

Wood Mackenzie expects the gasoline-focused units to be online this summer, while other analysts expect the RFCC to take until the end of the year.

Dangote Industries said earlier this month that gasoline deliveries will start in May. A company spokesperson didn’t immediately respond to questions.

“The refinery is already having a sizable impact on product markets even running in its most stripped-back form at minimum rates,” said Ronan Hodgson, an energy analyst at FGE. Units that boost diesel quality will also start up in the coming months.

On Wednesday, The PUNCH reported that the refinery announced a reduction in the price of diesel from N1,200/litre to N1,000/litre, a development that triggered excitement among operators in the downstream oil sector.

Dangote refinery announced this in a statement by its spokesperson, Tony Chiejina.

The statement read in part, “In an unprecedented move, Dangote Petroleum Refinery has announced a further reduction of the price of diesel from N1200 to N1,000/litre.

“While rolling out the products, the refinery supplied at a substantially reduced price of N1,200/litre three weeks ago, representing over 30 per cent reduction from the previous market price of about N1,600/litre.

“This significant reduction in the price of diesel at Dangote Petroleum Refinery is expected to positively affect all the spheres of the economy and ultimately reduce the high inflation rate in the country.”

Bloomberg reported on Thursday that as much as a third of the oil shipped into the giant refinery so far has been US-grade WTI Midland, according to shipping information compiled by the media house.

This, according to the report, might likely continue as long as the foreign oil undercuts the price of local supplies. It, however, stated that Dangote could be about to change that.

Nigeria released new rules earlier this week that will compel its oil producers to sell crude to domestic refineries in a bid to reverse the country’s reliance on imported refined products. It’s not yet clear how much each refinery will need to take.

The decision by the Federal Government to sell crude to indigenous refiners came as the government also stated that the refineries could now purchase crude using the local currency – naira, or the United States dollar.