Dangote Refinery Set To Begin Fuel Sales After Supply Dispute Resolution

Nigeria's Dangote Refinery is all set to start its crude processing plant, which will be capable of handling 650,000 barrels per day, to sell to fuel marketers from August onwards.

This progress comes after significant intervention from major industry players and the Nigerian government to resolve a dispute with suppliers, which had delayed the distribution of fuel. The refinery aims to reduce Nigeria's dependence on imported fuel, which consumes a massive portion of its limited foreign exchange reserves. Furthermore, it plans to supply petroleum products to other parts of West Africa, Premium Times reported.

The largest refinery in Africa started production in January, initially focusing on diesel and aviation fuel. This milestone was a relief, as construction delays extended the project's timeline to 10 years and increased initial costs from $9 billion to $19 billion upon completion.

Aliko Dangote, Africa's richest man and the president of the Dangote Group, said Sunday, "Gasoline production to commence in July with sales from August. Annual revenue is projected to exceed $26 billion," Premium Times reported.

Dangote informed journalists that the dispute with international oil companies over feedstock supply has been resolved, thanks to mediation by Nigerian National Petroleum Corporation and the government.

Last week, the Nigerian Upstream Regulatory Commission (NUPRC), responsible for regulating the exploration and production sector, announced an agreement with producers to facilitate easier supply to local refineries.

NUPRC's CEO Gbenga Komolafe said, "We will never allow price strangulation to disincentivize our domestic refining capacity optimization" after meeting with the members of the Oil Producers Trade Section, a group of domestic and international producers.

Komolafe assured that his agency would take steps to prevent unfair pricing in crude supply. His comments came after Dangote Group accused international oil companies (IOCs) of hindering the refinery's operations by offering crude oil at prices higher than the market rate.

Vice president of oil & gas at Dangote Industries Devakumar Edwin stated in June that IOCs were either demanding exorbitant premiums or claiming crude was unavailable.

To maintain operations, the refinery has recently imported crude from the US and expects a shipment from Brazil soon.