Nigeria began up the Dangote refinery on Monday in hopes of turning the nation right into a internet exporter of petroleum merchandise, however analysts mentioned securing crude provides may delay reaching full output this yr.
Outgoing President Muhammadu Buhari’s administration sees the refinery as the reply to persistent gasoline shortages in Nigeria, together with the latest within the run-up to the disputed February presidential election.
Nigeria spent $23.3 billion final yr importing petroleum merchandise and consumes about 33 million liters (8.7 million gallons) of gasoline a day. The Dangote Refinery has a capability of 650,000 barrels per day.
The plant plans to export surplus gasoline, turning Africa’s greatest oil producer into an export hub for petroleum merchandise. It additionally plans to export diesel, in accordance with Aliko Dangote, Africa’s richest man, who financed the refinery’s development.
The large petrochemical advanced, mentioned to be the world’s largest single-train refinery, value $19 billion to construct after a delay of practically a decade, up from preliminary estimates of between $12 billion and $14 billion, and has an excellent debt of about $2.75 billion, in accordance with the governor of Nigeria’s central financial institution.
The advanced additionally has a 435-megawatt energy plant, a deep-water port, and a fertilizer unit.
Talking on the fee ceremony, Dangote mentioned the precedence was to extend manufacturing to make sure the refinery may absolutely meet Nigerian demand and eradicate “the tragedy of import dependency.”
The ceremony was attended by President Buhari.
Dangote hopes to start out refining crude in June, however London-based analysis consultancy Power Facets mentioned commissioning was an advanced course of and it expects operations to start out later this yr, reaching 50-70 % subsequent yr, with a staggered course of from different models. in 2025.
The refinery wants a gentle provide of crude, however Nigeria’s oil manufacturing has declined as a consequence of oil theft, pipeline vandalism and an absence of funding. In April, manufacturing fell under a million barrels per day (bpd), under Angola’s output.
Decrease manufacturing would have an effect on the flexibility of state oil firm Nigerian Nationwide Petroleum Company (NNPC) to honor an settlement to provide the Dangote refinery with 300,000 bpd of crude, mentioned economist Kelvin Emmanuel, creator of a report on oil theft on final yr.
NNPC, with a 20 % stake within the refinery, has manufacturing sharing agreements with oil majors equivalent to ExxonMobil, Shell and Eni and is entitled to a share of the crude, which it additionally trades with merchants for gasoline and diesel.
The refinery has not signed an settlement to purchase from Nigeria’s oil majors.
That might see Dangote import crude from merchants equivalent to Trafigura and Vitol, Emmanuel mentioned, at a time when native refining was anticipated to save lots of international alternate and preserve costs decrease.
Nevertheless, Power Facets mentioned that in the long run, the Dangote refinery may finish Nigeria’s gasoline deficit, reshape the Atlantic Basin gasoline market and export diesel that meets European Union specs.