- Refinery to get 400,000 barrels of crude daily
Dangote Oil Refinery will raise Nigeria’s Gross Domestic Product to $322bn by 2025, according to a new report.
The report, titled ‘Impact of Dangote Refinery on the Nigerian Economy’, which was released recently by Data Services & Resources Ltd, indicated that without the refinery, Nigeria’s GDP was expected to grow by 3.34 per cent in 2024, increasing to 4.13 per cent by 2030.
It noted that with the refinery in operation, GDP growth was projected to rise to 4.15 per cent in 2024 and reach 6.21 per cent by 2030.
The report also stated that Nigeria’s GDP at current market prices would increase from N234.43trn in 2023 to N304.8trn in 2024, with further growth to N364.94trn in 2025.
It added that by 2026, GDP was projected to hit N432.24trn, climbing to N806.91trn by 2030.
The Managing Director at Data Services & Resources Ltd, Afolabi Olowookere, stated that the refinery’s impact was expected to boost GDP to $370.49bn in 2026, $374.69bn in 2027, and continue rising to $412.91bn in 2028 and $446.98bn in 2029.
The report added that the Dangote Refinery, which began initial production in January 2024, was expected to positively and hugely impact the economy.
It stated that the refinery’s processing capacity would hit 650,000 barrels per day by the first quarter of 2025, producing 10.4 million tonnes of gasoline, 4.6Mt of diesel, and 4Mt of aviation fuel annually.
The report also highlighted the contribution of the refinery to fiscal sustainability, stating that it would create thousands of direct and indirect jobs.
It added that it would reduce Nigeria’s reliance on imported petroleum products, and improve the country’s trade balance by increasing exports of refined products.
The report noted that by reducing fuel subsidies and generating substantial tax revenues, the Dangote Refinery was set to strengthen Nigeria’s fiscal position and provide much-needed resources for infrastructure and social development projects.
It maintained that the Nigerian government, through the Nigerian National Petroleum Company, initially held a 20 per cent stake in the refinery, but that had been reduced to 7.2 per cent.
The refinery’s operation is also expected to stimulate growth in the upstream, midstream, and downstream sectors, boosting investments in oil refining, chemical and pharmaceutical products, plastic and rubber production, as well as cement manufacturing.
Meanwhile, the Federal Government commenced the sale of crude oil to Dangote Refinery and other local refineries in naira on October 1.
The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, disclosed this in a statement on Saturday.
He stated in a post on the official X account of the ministry that the government had started the sales of crude to local refineries in naira on October 1.
“The Minister of Finance and Coordinating Minister of the Economy announced that, in line with the Federal Executive Council directive, the sale of crude oil and refined petroleum products in naira has officially commenced as of October 1, 2024.
“Following a meeting of the Implementation Committee, chaired by the Hon. Minister of Finance and Coordinating Minister of the Economy on October 3rd, 2024, to conduct a post-commencement review of the Crude Oil and Refined Products Sales in Naira initiative, the commencement of this strategic initiative was affirmed by key stakeholders,” the statement read.
Edun also confirmed that the stakeholder meeting was attended by the Minister of State, Petroleum (Oil), Heineken Lokpobiri; the Vice President of Dangote Group, Edwin Devakumar; and Group Managing Director of the Nigerian National Petroleum Company, Mele Kyari, among others.
Dangote Refinery will propel Africa out of poverty – AU’s Ibn Chambas
Also, celebrated diplomat and African Union High Representative for Silencing the Guns, Mohamed Ibn Chambas, has described the 650,000bpd Dangote Refinery, as a transformational project that would propel Africa out of poverty.
The Chairman of the African Union High-Level Panel on Sudan made this statement during his visit to the Dangote Refinery in Ibeju Lekki, Lagos State, over the weekend.
Noting that the world-class refinery is a testament to Aliko Dangote’s foresight, Nigeria’s ingenuity, and African entrepreneurship, Chambas emphasised that the Dangote Group is leading the way for the private sector in Africa.
“I believe these are the types of transformational projects that would propel Africa out of poverty. Projects like the Dangote Refinery create jobs, have a multiplier effect on the national and regional economies, provide cheaper and reliable fuel for transportation, agriculture, and industries. In short, they lubricate the real economy. The Dangote Group is leading the way for the private sector in Africa which has a pivotal role to play in the fight against poverty and in creating opportunities for the youth. This is a veritable pathway to silencing the Guns,” he said.
The former president of the Economic Community of West African States commended Alhaji Aliko Dangote for his “business acumen, courage, tenacity, and vision matched with action” in successfully driving such a mega project to completion.
He noted that Dangote had cemented his status as a true leader of the African private sector.
Ibn Chambas also praised President Bola Tinubu for ensuring a consistent supply of crude oil to the Dangote Refinery.
“I would also like to take this opportunity to salute President Bola Tinubu for his bold and forthright decision to ensure provision of regular and dependable supplies of Nigeria crude oil to the Dangote Refinery.
“As a successful entrepreneur in his own right with a proud record of success in the private sector in the past, Tinubu understands the challenges. He has demonstrated commitment to creating an enabling business environment in Nigeria in general, and the smooth operation of the refinery in particular. I encourage all Africans across the continent and in the diaspora to visit the Dangote Refinery for inspection.
“A visit to the refinery provides an insight into the tremendous potential and hope there is, not only for Nigeria but, indeed, for the entire African continent,” he said.
Dangote refinery to get 400,000 barrels of crude daily as Naira-for-crude deal begins
The Federal Government is set to deliver up to 400,000 barrels of Nigerian crude oil daily to the Dangote refinery under its naira-for-crude agreement, a report by Bloomberg stated on Monday.
It said this significant development is expected to take place over the next two months, amounting to 24 million barrels of Nigerian supply between October and November 2024.
This increase in processing capacity could have substantial implications for both the refinery’s operations and the local oil industry, transforming the region’s import and export markets.
This new development follows the announcement by the Federal Government that the naira-for-crude deal has commenced.
According to cargo allocations reviewed by Bloomberg News, Dangote’s increasing reliance on local feedstock will disrupt the Atlantic oil market by substantially decreasing Nigeria’s crude exports.
The 650,000-barrel-a-day plant — larger than any other in Africa or Europe — will claim 13 to 14 shipments from Nigeria’s typical monthly program of about 50 cargoes.
The West African crude market is set to be “substantially tighter” in the fourth quarter because of the supply to Dangote, said Ronan Hodgson, a London-based analyst at FGE.
The volumes could even send Nigerian exports below 1 million barrels a day, he said.
Some shipments over the next two months may not be delivered as planned, and October’s list includes two cargoes already delayed from September.
Still, the scheduled volume is significantly larger than the average 255,000 barrels a day of Nigerian oil taken in by Dangote over the first half of the year as it gradually ramped up processing, data compiled by Bloomberg show.
Dangote is already running at 60-70 per cent capacity and will reach its full rate within months, project management firm Engineers India Ltd. Chairman Vartika Shukla said last month.
The latest allocations also suggest that Dangote has continued to curtail its buying of US crude, according to traders.
Earlier this year, the refinery imported millions of barrels of WTI Midland, before re-selling some of the oil and scrapping plans to buy more.
Nigerian National Petroleum Company Limited reached an agreement with Dangote last month under which the country’s state-owned energy firm will supply crude in return for being the sole distributor of the refinery’s crucial gasoline production.
If Dangote’s ramp-up continues to advance in the coming months, Nigeria could start to realize its long-held goal of curbing costly oil product imports.
“If the refinery runs at higher rates, the West African market for gasoline and diesel imports will shrink extremely quickly,” FGE’s Hodgson said.
