Dangote Refinery turns to US for crude oil amid supply shortage
Agency Report
The Dangote Petroleum Refinery, one of Africa’s largest and most ambitious oil refining projects, has confirmed it is awaiting the arrival of up to 12 million barrels of crude oil from the United States next month.
This marks a significant step as the refinery grapples with a critical shortage of local crude supply from the Nigerian National Petroleum Company Limited (NNPC).
The $20 billion facility, located in Lekki, Lagos, had aimed to ramp up its refining capacity to 650,000 barrels per day (bpd) by June 2025.
However, the current local supply challenges are hindering its ability to reach this target. The NNPC, which supplies crude for domestic refineries, has reportedly been struggling to meet the refinery’s daily demand.
While the NNPC is tasked with providing 450,000 bpd of crude for Nigeria’s local consumption, it is falling short, providing only around 350,000 bpd.
As a result, Dangote Refinery officials have sought alternatives, including importing crude from the US.
Experts are observing this shift with mixed reactions. Economic analyst Akin Akintoye argues that this importation strategy may have long-term implications for Nigeria’s domestic oil market.
“It’s concerning that a refinery of Dangote’s scale, which was designed to bolster Nigeria’s self-sufficiency in refined products, is now turning to imports. This highlights the severe limitations in local crude production,” he said.
Meanwhile, energy expert and former petroleum executive, Dr. Nnena Iroegbu, emphasized the broader structural issues at play.
“This situation reflects the underperformance of Nigeria’s oil sector, particularly the challenges faced by the NNPC in ensuring a steady and reliable supply of crude. This is not just an issue for Dangote, but for the country’s entire refining ecosystem,” she stated.
The refinery’s decision to import crude also comes at a time when it is expanding its storage capacity. Officials have confirmed the construction of eight additional storage tanks, which will increase its crude oil stockpile capacity by 41.67 per cent to 3.4 billion liters.
“We are building more tanks to ensure we can manage the volatility in crude supply. Importing crude from other countries instead of relying solely on local sources means we must have larger stockpiles,” explained Devakumar Edwin, Vice President in charge of the oil and gas business at Dangote Industries.
The Dangote refinery’s reliance on imports, while necessary for the time being, underscores the fragility of Nigeria’s oil supply chain.
Industry analysts are urging for urgent reforms and investments to stabilize local crude production. With the refinery’s ambitious goals for 2025 still in play, stakeholders are closely watching how this supply dilemma evolves.
