Thursday, November 2, 2023


The inability to provide crude oil to domestic refineries, including the substantial Dangote Refinery, has halted the production of refined petroleum products. The 650,000 barrels per day Dangote refinery in Lagos fell short of its projected October production, marking the second time in 2023 that it couldn't meet expectations.

This failure dents hopes for Nigeria to reduce petrol importation, as the country continues relying on imported fuels due to the delay in local production. Several modular refineries are ready to produce but are held back by the lack of available crude oil, hindering their operation, including the Dangote Refinery in Lagos, which has not received the necessary crude volumes for production.

Despite earlier plans to start production in October for diesel and November for petrol, the Dangote Refinery's crude oil supply remains problematic, with the NNPC struggling to provide the required crude oil.

Reports from industry sources, including the Nigerian Upstream Petroleum Regulatory Commission and Federal Ministry of Petroleum Resources, confirm the issues with crude oil supply. Concerns have been raised by the Dangote Refinery about the oddity of importing crude when Nigeria is an oil-producing country.

The limitation in securing feedstock, i.e., crude oil, is a significant barrier for modular refineries, preventing financiers from supporting their production. Although there are several new companies ready to begin production, the lack of guaranteed feedstock remains a primary hurdle.

Current operational modular refineries like Duport Edo Refinery, Walter Smith Refinery, and Niger Delta Refinery are producing diesel but in limited quantities due to insufficient feedstock.

The scarcity of crude oil supply to domestic refineries is attributed to a desire by crude oil producers to export and earn dollars. Additionally, Nigeria's obligation to meet OPEC's approved crude oil production quota for export contributes to the reluctance of crude oil producers to sell to local refiners, as some aim to clear debts by exporting the commodity.

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