December 24, 2024 [CNBC Africa]- Nigeria’s Dangote Refinery is now operating at 85% capacity and is on course to deliver European-standard products by January, an executive said on Friday.
The 650,000-barrel-per-day Dangote oil refinery built by Nigerian billionaire Aliko Dangote in Lagos aims to compete with European refiners when operating at full capacity but had been struggling to secure sufficient crude locally.
“We have gone up to 550,000 bpd, that is 85% capacity in crude distillation,” Edwin Devakumar, head of the refinery, told Reuters.
The refinery was forced to source crude from international markets following a dispute with the Nigerian state-oil firm the NNPC over a crude supply deal under which Dangote had agreed to sell a 20% stake in the refinery to NNPC for $2.76 billion.
“Of this, we agreed that they will only pay $1 billion while the balance will be recovered over a period of five years through deductions on crude oil that they supply to us and from dividends due to them,” a Dangote spokesperson said.
“Unfortunately, NNPCL was later unable to supply the agreed 300,000 barrels a day of crude given that they had committed a greater part of their crude cargoes to financiers with the expectation of higher production which they were unable to achieve,” the spokesperson said in a statement on Wednesday.
Dangote Refinery began processing crude in January into products including diesel, naphtha and jet fuel, and started processing petrol in September.
It still faces challenges distributing the products at home with local fuel traders and even the NNPC importing refined products. The NNPC recently said it had restarted its 60,000 bpd Port Harcourt refinery.
Dangote Refinery cut the price of its petrol to 899.50 naira ($0.58) per litre on Thursday from 970 naira “to alleviate transport cost during the holiday season”.
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