The Chief Executive Officer and Managing Director of Dangote Refinery, David Bird, has attested that the facility has entered a new phase of sustainable growth after reaching full production capacity at a critical time.
As soon as the facility had attained its peak output of 650,000 barrels per day in February, it started shipping record amounts of diesel and jet fuel abroad, especially to areas affected by disruptions of fuel supplies from Middle Eastern producers.
However, Bird stated that sustaining this output requires more trading expertise on the company’s part and is testing its logistics capabilities. He pointed out that unlike oil-exporting countries, which use conventional refineries, Dangote resembles a global merchant refinery more than others operating in Europe and Asia.
The emergence of the refinery in the Nigerian economy since its launch in early 2024 has had tremendous implications for the country’s fuel market. Although the facility was initially limited by gradual ramp-up in operations, it has now managed to attain an output near the maximum capacity of the plant. Indeed, there was even an instance when the company switched to a “max jet mode” of operation making it the biggest exporter of jet fuel in the world in April.
In order to increase output of gasoline, the company is also importing blending components such as GTL naphtha and condensates to increase beyond the base output. According to Bird, currently the refinery produces about 75 million litres per day, with the potential to reach 100 million litres daily if storage infrastructure is improved.
Looking forward, some of the diversification activities that Dangote Refinery is planning to undertake include construction of a propane dehydrogenation facility which will make polypropylene.
Even though initially designed to handle light sweet crude oil from Nigeria, Dangote Refinery has had to adapt because of unreliable crude supply from within. Currently, it processes over 40 different types of crude oils, and there are plans for the construction of more processing facilities which will enable Dangote Refinery to handle more types of crude oil as part of the $10 billion investment program that will take it to a processing capacity of 1.4 million barrels per day.
As such, the refinery will have to look for more crude oil suppliers who include among others those from the United States, the Middle East, and even South America. According to Bird, blending will be one of the crucial operations for the refinery going forward.
In the meantime, the company has also been taking steps to improve its market power by engaging in long-term contracts with governments, distributors, and national oil companies.
Also, work is underway to improve the infrastructure of the facility. For example, there are ongoing efforts to create an improved marine jetty in order to accommodate various kinds of vessels, and reduce the burden on the current loading process and dependence on truck transportation.
In spite of its success, Dangote Refinery still faces several challenges, such as the lack of sufficient storage space, making any problems hard to cope with, although executives say that their strategy revolves around rapid product delivery rather than accumulation.
At present, the facility is exporting about half of its production while the rest will be sold to foreign markets in the framework of expansion.
Dangote Group is currently preparing for its IPO and intends to offer up to 5-10 percent of shares at the Nigerian Stock Exchange at the value of approximately $50 billion.
As Bird noted, the company expects its refinery to make the Lekki Free Zone one of the largest energy and logistics hubs in the Middle East style.
