…Says Dangote Refinery imports 9-10m barrels of crude month-to-month from US, others
Africa is more and more changing into a vacation spot for affordable, typically poisonous petroleum merchandise — lots of that are blended to substandard ranges that might not be permitted in Europe or North America.
This concern was raised by the President/Chief Executive, Dangote Industries Limited, Aliko Dangote, through the ongoing West African Refined Fuel Conference held in Abuja. The occasion is organised by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and S&P Global Commodity Insights.
Dangote revealed that, as a result of continent’s restricted home refining capability, Africa imports over 120 million tonnes of refined petroleum merchandise yearly, at a price of roughly $90 billion.
While appreciating the Management of the Nigerian National Petroleum Company Limited (NNPC), for making some cargoes of Nigerian crude obtainable to us from begin of manufacturing thus far, he revealed that the corporate, month-to-month import between 9-10 million barrels of crude from the United States of America and different nations. He stated: “As we speak today, we buy 9 – 10 million barrels of crude monthly from US and other countries. I must thank NNPC for making some cargoes of Nigerian crude available to us from start of production to date.”
Dangote additional said that regardless of producing round 7 million barrels of crude oil per day, Africa solely refines about 40% of its 4.3 million barrels each day consumption of refined merchandise domestically. In stark distinction, Europe and Asia refine over 95% of what they eat.
“So, while we produce plenty of crude, we still import over 120 million tonnes of refined petroleum products each year, effectively exporting jobs and importing poverty into our continent. That’s a $90 billion market opportunity being captured by regions with surplus refining capacity. To put this in perspective: only about 15% of African countries have a GDP greater than $90 billion. We are effectively handing over an entire continent’s economic potential to others—year after year,” he stated.
While reaffirming his perception within the energy of free markets and worldwide cooperation, Dangote emphasised that commerce should be grounded in {economic} effectivity and comparative benefit — not on the expense of high quality or security requirements. He burdened that, “it defies logic and economic sense for Africa to be exporting raw crude only to re-import refined products—products we are more than capable of producing ourselves, closer to both source and consumption.”
Reflecting on the expertise of delivering the world’s largest single-train refinery, Dangote additionally highlighted a variety of challenges confronted, together with technical, business, and contextual hurdles distinctive to the African panorama.
Africa’s wealthiest man described constructing refineries such because the Dangote Petroleum Refinery as one of the crucial capital-intensive and logistically complicated industrial services ever constructed. The Dangote refinery undertaking, he stated, required clearing 2,735 hectares of land (seven instances the scale of Victoria Island), of which 70% was swampy, requiring the pumping of 65 million cubic metres of sand to stabilise the location and lift it by 1.5 metres, over 250,000 basis piles, and thousands and thousands of metres of piping, cabling, and electrical wiring amongst others.
“At peak, we had over 67,000 people on-site of which 50,000 are Nigerians, coordinating around the clock across hundreds of disciplines and nationalities. Then, of course, came the COVID-19 pandemic which set us back by two years and brought new levels of complexity, disruption, and risk. But we persevered,” he famous.
The refinery additionally required the development of a devoted seaport, as present Nigerian ports couldn’t deal with the scale and quantity of apparatus required. This included over 2,500 items of heavy tools, 330 cranes, and even the institution of the world’s largest granite quarry, with a manufacturing capability of 10 million tonnes per 12 months.
“In short, we didn’t just build a refinery—we built an entire industrial ecosystem from scratch,” he stated.
Despite the refinery’s technical success, Dangote recognized vital business challenges, notably change charges which have gone from N156/$ at inception to N1,600/$ at completion, and challenges round crude oil sourcing. Although Nigeria is alleged to provide about 2 million barrels per day, the refinery has struggled to safe crude at aggressive phrases.
“Rather than shopping for crude oil immediately from Nigerian producers at aggressive phrases, we discovered ourselves having to barter with worldwide buying and selling corporations, who had been shopping for Nigerian crude and reselling it to us—with hefty premiums, after all.
Logistics and regulatory bottlenecks have additionally taken a toll. Port and regulatory costs reportedly account for 40% of complete freight prices, generally costing two-thirds as a lot as chartering the vessel itself.
“Refiners in India, who purchase crude oil from regions even farther away, enjoy lower freight costs than we do right here in West Africa because they are not saddled with exorbitant port charges,” Dangote stated.
He added that, when it comes to port costs, it’s at the moment costlier to load a home cargo of petroleum merchandise from the Dangote Refinery, as clients pay each on the level of loading and on the level of discharge. In distinction, once they load from Lomé, which competes with them, they pay solely on the level of discharge.
Dangote additional criticised the dearth of harmonised gas requirements throughout African nations, which creates synthetic boundaries for regional commerce in refined merchandise.
“The fuel we produce for Nigeria cannot be sold in Cameroon or Ghana or Togo, even though we all drive the same vehicles. This lack of harmonisation benefits no one—except, of course, international traders, who thrive on arbitrage. For local refiners like us, it fragments the market and imposes unnecessary inefficiencies.”
Dangote, stating the problem with diesel manufacturing in Africa, famous, “to give one example, the diesel cloud point for Nigeria is 4 degrees. Without going into the technical details, this means that the diesel should work at a temperature of 4 degrees centigrade. Achieving this comes at a cost to us and limits the types of crude we could process. But how many places in Nigeria experience temperatures of 4 degrees? Other African countries have a more reasonable range of 7 to 12 degrees. This is a low hanging fruit which could be addressed by the regulators.”
He additionally cited the rising inflow of discounted, low-quality gas originating from Russia — blended with Russian crude beneath value caps and dumped in African markets.
“And to make matters worse, we are now facing increasing dumping of cheap, often toxic, petroleum products—some of which are blended to substandard levels that would never be allowed in Europe or North America,” he stated.
Dangote referred to as on African governments to comply with the instance of the United States, Canada, and the European Union, which have carried out protecting measures for home refiners.
