The Dangote Refinery is set to start diesel and jet fuel refining operations by October 2023 and petrol refining by November 2023, as the state-owned oil firm NNPCL with a 20% stake, has been unable to supply crude to the refinery.
Dangote Group Executive Director Devakumar Edwin made the statement during an interview with S&P Global Commodity Insights.
Edwin told S&P that the NNPCL had said they had committed their crude on a forward basis to someone else, so they didn’t have the crude immediately, in response to questions about the timeline change.
He noted that this is a temporary issue, and the refinery should run on exclusively Nigerian crude by November 2023.
The refinery’s diesel output will help ease a global diesel supply crunch, amid surging demand and also earn badly needed foreign exchange for the Dangote Group and Nigeria.
Soaring prices pushed US diesel prices above $140 to the highest ever for this time of year last week, while Europe’s equivalent has soared 60% since summer.
He noted further that the Nigerian oil will be purchased in US dollars, and not naira because it is in a free zone on the outskirts of Lagos.
However, NNPCL will supply some crude at knockdown prices due to its equity stake.
According to him, the Dangote refinery will receive its first cargo of crude in the next two weeks and will begin producing up to 370,000 barrels per day of diesel and jet fuel from October 2023.
He also noted that by November 30, the refinery will start the phased ramp-up to 650,000 barrels per day of petrol.
Edwin said that the Dangote refinery can process most African crudes, apart from heavy Angolan grades as well as Middle Eastern Arab Light and even US light tight oil.
He said: “We can take even some of the Russian grades… if the global system opens up to allow us to receive them. Basically, if you look at our production profile, 50% of my production will meet 100% of the requirements of the country.
“Excess gasoline – which will be 10 ppm sulfur Euro 5 quality — will be exported to other African markets as well as the US and South America, although the volumes will be relatively small. Meanwhile, jet fuel will be exported to Europe and diesel will be sold in sub-Saharan Africa.”
The initial production capacity at the refinery will be a 27.2 million tonnes a year, or 74,538 tonnes per day, of which diesel output will be equivalent to 15,197 tonnes per day (5.54 million tonnes a year), once production ramps up.