Anticipating a significant shift in the nation’s refining sector, stakeholders of the oil and gas industry are looking forward to the commissioning of the long-awaited Dangote refinery later this month.
The oil refinery, which began construction in 2016, is set to commence its first production, with President Muhammadu Buhari expected to lead the commissioning ceremony.
The inauguration of the 650,000 barrels per day refinery has been confirmed by the federal government. The company is currently adding final touches for the inauguration, with operations expected to be developed in stages.
According to the stakeholders, the refinery is considered a solution to the country’s dependence on imports for almost all of its refined petroleum products.
The multi-billion-dollar Oil Refinery and Petrochemical Company is expected to address Nigeria’s perennial refining issues.
The implementation of this methodology has the potential to aid the federal government in achieving self-sufficiency in locally refining crude oil, thereby conserving foreign exchange that would have been expended on petroleum imports.
The Dangote Refinery, the largest single-train refinery globally, is expected to manufacture up to 650,000 barrels per day, which equates to a total of 103,341,742 litres of refined petroleum products. The multi-billion-dollar Oil Refinery and Petrochemical Company will tackle Nigeria’s long-standing refining challenges.
The Dangote refinery’s expenses escalated to $19 billion from initial projections of $12-14 billion due to prolonged delays. The refinery complex occupies a land area of about 2,635 hectares, bigger than Victoria Island in Lagos, and has the most massive pipeline infrastructure globally, measuring 1,100 kilometres, to manage three billion Standard Cubic Feet per day (Scf/d) of gas because of the refinery’s vast capacity.
Sources state that the refinery has a power plant with a 435MW capacity, which can fulfil the total power demand of the Ibadan Electricity Distribution Company (IBEDC). The multi-billion-dollar Oil Refinery and Petrochemical Company will allegedly tackle Nigeria’s persistent refining issues.
Mayowa Afe, president and managing director of Danvic Petroleum International, told LEADERSHIP that one of the advantages the refinery will offer to the industry is the ability to add value to crude oil that is traded for white goods because local refineries are not operating at full capacity.
Former president of the Oil and Gas Trainers Association of Nigeria (OGTAN), Afe, said that once the refinery is operational, it will relieve pressure on the limited foreign currency that is often obtained from the black market.
“It is a good development and will add to the positive changes the outgoing administration has made to the industry, as that will help address subsidy crises and solve the importation of products,” he continued.
On his part, the executive secretary at Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), Olufemi Adewole, said, with the development, depots will begin to operate at full capacity, which will, in turn, bring about investment in the industry.
Adewole said depot operators have had to contend with the scarcity of foreign exchange to bring in imported products into depot facilities, but since refining will be done in-country in a huge capacity given the size of the refinery, marketers will now have products to supply and that will also ease hindrances that had brought about challenges in the sector.
The CEO of the Centre for the Promotion of Private Enterprise(CPPE), Muda Yusuf, said, this is a positive development for Oil & Gas sector, adding that, “this is one project many Nigerians have been looking forward to if only to safe us from depression of fuel importation and from challenges around our refinery and petroleum products. This is a major development for the economy and particularly Oil & Gas sector.”
He stated that “this will ease some of the pressure that the country has been experiencing around the importation of petroleum products; it may not totally eradicate the challenges of subsidy, but it will make it easier for us to have engagement on subsidy with stakeholders.
“Stakeholders have been clamouring for domestic refinery of petroleum products and now that this is been achieved and conversation around the subsidy removal will be easier to deal with and this will be a major reform.”
Yusuf hoped that once Dangote Refinery is commissioned and it commences production, saying that “we are hoping that this is not because the outgoing President is leaving and wants to commission before he leaves. We are hoping that once the commissioning of the Refinery is done, production commences.”
The director-general of Nigeria Employers’ Consultative Association (NECA), Mr Adewale Oyerinde, recently said, subsidy will die a natural death if the country’s refineries were functional.
He argued that the country has the capacity to refine petroleum products that would meet its daily need if the local refineries were functional and complimented by the Dangote Refinery.
According to him, “if the refineries were working, the country would probably not import fuel. We will probably be thinking of exporting now with the Dangote Refinery also coming up. Therefore, we are dealing with the issue of subsidy because we import fuel for local consumption.”
Financial analysts stated that the operation of the Dangote refinery has a number of gains for Nigeria and the rest of Africa, saying, “Aliko Dangote estimated that Nigeria would save up to $10 billion in foreign exchange (FX) and generate another $10 billion in exports when the facility begins operation.”
They expect “the onboarding of the refinery to provide leverage for removing the long-over-due subsidy; guarantee the supply of petroleum products and other derivatives (such as Jet A1, Petcoke, Asphalt, among others) for Nigeria and neighbouring countries; boost the growth of associated services and products supply chain partners; and break the monopoly of the NNPCL on product supply.
“However, domestic refining from the Dangote refinery is not a guarantee for cheap petroleum products nor another round of subsidy regime as the refinery is expected to get feedstocks at the prevailing international price but sell at a cost-reflected price in Naira equivalent.”
Analysts also said the commissioning would not translate immediately to commercial refining and distribution, saying “howbeit, it signals the readiness of the refinery to begin operations in the third or fourth quarter of the year.”
