Dangote Refinery can solve Nigeria’s fuel subsidy and scarcity crises – Report

The Dangote Refinery which is slated to begin operations in late 2023, is a formidable solution to Nigeria’s core petroleum crises caused by fuel subsidies and the country’s persistent fuel scarcity.

This was disclosed by Chapel Hill Denham in a report titled “Dangote Refinery can provide the needed breather for Nigeria’s public finances”

According to the study, when completed, the Dangote refinery will be the largest in Africa, surpassing the Skikda refinery in Algeria (366kb/d capacity) and Nigeria’s current largest refinery, the Port Harcourt Refinery (210kb/d capacity).

What the report is saying

The Dangote refinery, according to the report, offers a ray of hope amid the recent instances of fuel crises, which have been made worse by the FGN’s failure to refine even a drop of crude oil locally.

Chapel Hill Denham stated that Nigeria is still largely dependent on imported fuel despite having four refineries with a combined capacity of 445 kb/d. The Dangote refinery is expected to generate up to 66 million litres of PMS, ATK, AGO, HHK, slurry, and other petroleum products with a capability to refine 650 kb/d of crude.

We believe change is imminent, with the Dangote Refinery looking set to begin operation towards the twilight of 2023. If fully utilised, we believe the refinery can redefine Nigeria’s domestic production of white products(petrol, Automotive Gasoline Oil, AGO and Dual Purpose Kerosene, DPK). and potentially turn the country into a net exporter. That said, in this report, we present what we learnt during our last visit to the Dangote Refinery.” the report added

What you should know

  • Following several months of decline, Nigeria’s crude oil production increased in May, climbing by 70,000 barrels per day and averaging 1.42 million BPD.
  • A revised target of 1.772 million barrels per day (mbpd) for June 2022 was set by OPEC, up from the 1.735 million barrels per day (mbpd) objective approved in May 2022.
  • With an alleged average oil output of 1.24 mbpd in the month of March and accusations of an increase in crude oil theft, Nigeria is reportedly struggling to reach its approved OPEC crude oil quota.
  • As long as force majeure is in effect on the Bonny Light export stream, Nigerian output showed a 40,000bdp reduction in April 2022, according to a Reuters survey.
  • Consequently, the anticipated Dangote refinery’s production capacity is expected to provide a much-needed boost to Nigeria’s production output.

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