In a strategic shift, Nigeria’s National Petroleum Company (NNPC) Limited is set to power the colossal 650,000 barrel per day Dangote oil refinery using its own crude oil supply.
The NNPC, a key player in Nigeria’s energy sector, is preparing to deliver up to six shipments of crude oil to the Dangote refinery in December for testing purposes. According to industry insiders who shared insights with Reuters, this arrangement will see six cargoes, equivalent to 200,000 barrels per day, being dispatched in December, marking the commencement of a year-long agreement. Subsequent volumes in the coming months will be based on mutual agreement and availability.
While sources suggest a planned supply of 4-5 cargoes, translating to at least 130,000 barrels per day, a Dangote Group representative, preferring to remain anonymous, hinted that some aspects of these agreements involve confidentiality clauses.
NNPC, as a key stakeholder, holds a 20 percent ownership share in the Dangote refinery, further underscoring the significance of this partnership.
The Dangote refinery, which embarked on its commissioning journey in May this year, has been subject to substantial delays and cost overruns. Originally estimated at $12-14 billion, the refinery’s final cost has surged to $19 billion, highlighting the challenges and complexities involved in such a monumental project.
This move aligns with the Nigerian government’s fresh commitment to prioritize domestic crude oil refining, driven by the colossal expenditure of $74.6 billion on petrol imports between 2006 and 2021. Gbenga Komolafe, the Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), reinforced this commitment during a recent high-level meeting with oil producers in Abuja.
Komolafe emphasized the positive impact on the economy and reduced costs associated with petroleum products if Nigeria can meet its refining obligations. He pointed out that Nigeria has the potential to become a net exporter of refined products and highlighted provisions within the Petroleum Industry Act (PIA) that address this very issue.
The Chief Executive expressed optimism in the Dangote refinery’s readiness to commence operations and the company’s request for feedstock guarantees from the government. He stressed the importance of ensuring Nigeria meets its feedstock requirements, emphasizing the significance of this development for the nation.