Dangote Refinery Starts Up With 350,000BOPD, Will Work with the Market for Supplies - Africa’s premier report on the oil, gas and energy landscape.

Dangote Refinery Starts Up With 350,000BOPD, Will Work with the Market for Supplies

The Dangote Petroleum Refinery, which announced its commencement of production over the last weekend, started by utilizing 350,000Barrels of Oil Per Day from its storage, to output diesel and aviation fuel, for now.

The facility, located in the Lekki Free Zone in the eastern flank of Lagos, Nigeria, has a name plate capacity for 650,000BOPD, but the 350,000BOPD, Africa Oil+Gas Report learns, is a precautionary startup rate, because all the units are not yet ready to start. The company is avoiding production of giveaways, as it calls them: “products we have to sell at low prices”.

Dangote Petroleum Refinery is also using the startup period to test the equipment and plants under actual conditions, crude oil processing and high temperatures.

The company has been upfront about its challenges of procuring feedstock, informing the public step by step as it received million after million of barrels of Nigerian crude until it reached six million barrels in its storage. The announcement of commencement of production happened on January 13, 2024, five days after the six million mark was declared.

For a six-million-barrel storage, the 350,000BOPD input would suggest a 17-day supply, but that’s not how it works. Africa Oil+Gas Report learns that 11Million barrels are being contracted for, and will be delivered to the refinery, starting shortly. The Dangote Petroleum Refinery will stock the storage tanks to ensure maximum freedom to operate at optimal rates as conditions and the market warrant.

Akin Omole, the Chief Executive Officer of the Dangote Petroleum Refinery, in a January 9, 2024 statement, four days before the announcement of the Refinery start up, declared that Liquefied Petroleum Gas  (LPG) would be included among the startup products of the facility “before subsequently progressing to the production of Premium Motor Spirit (PMS)”.  Although LPG wasn’t included in the final statement announcing the Refinery take off, Africa Oil+Gas Report learns that the facility has, in its sights, early production of Propane and Butane. The latter is cooking gas.

Dangote’s struggle with feedstock procurement was surprising news to some of those who had followed the course of the project from the earliest days of construction.

The company had declared, as far back as 2017, that the refinery was designed to receive and process crude from many parts of the world. But foreign exchange availability has moderated that vision. The main supplier now is (the state hydrocarbon company) NNPC, which, in the view of the Dangote Petroleum Refinery, can supply in equivalent dollar, payable in Naira, since the products will be for Nigeria initially. The thinking is that the transaction will relieve the foreign exchange pressure on Nigeria very considerably.

But this is a two-way street: as Dangote snaps up a significant portion of NNPC’s share of crude, which is the Federation crude, and pays in Naira, it also increases pressure on availability of foreign exchange in the wider Nigerian economy. This is an interesting debate for economists, as 350,000BOPD is easily around 20% of the country’s total output..

The Dangote Petroleum Refinery can load 2,900 trucks a day at its truck-loading gantries. The products from the Refinery will conform to Euro V specifications. “The refinery design complies with the World Bank, US EPA, European emission norms, and Nigerian Midstream Downstream Petroleum Regulatory Authority (NMDPRA) emission/effluent norms. Employing state-of-the-art technology”, the Refinery notes.

 

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