Dangote Refinery Faces Fuel Shortages Amid Crude Oil Supply Issues
The Dangote Petroleum Refinery has expressed concerns over the availability of fuel in Nigeria, emphasizing that it is ready to supply enough fuel to meet domestic demand. However, the company has also warned that it may have to export its products if the government fails to provide sufficient crude oil for its operations.
Alhaji Aliko Dangote, the President of the Dangote Group, recently shared insights with Al Jazeera, stating that the refinery is nearly out of aviation fuel and diesel but still has an excess of petrol. This situation highlights the growing pressure on the facility as global fuel supplies face disruptions due to conflicts such as the US-Iran war.
The refinery, located in Lekki, Lagos State, has a capacity of 650,000 barrels per day and is now serving as a critical source of fuel for several African countries. With the demand for petroleum products surging, the facility is under immense pressure to maintain its output.
“The demand is so high, I can tell you for nothing. Today, we have almost sold out our jet fuel. We have almost sold out our gas oil. What we have is just the gasoline (petrol), which is the PMS; we call it Premium Motor Spirit. That’s the only one that we have in excess,” said Dangote.
This shortage has raised alarms among various sectors, particularly the aviation industry and manufacturers who depend on diesel for power generation and transportation. The situation has also prompted discussions about the long-term sustainability of the refinery’s operations.
A senior management official from the Dangote Group, who chose to remain anonymous due to the sensitivity of the matter, assured that the refinery would not leave Nigeria without fuel. “No! We will not starve Nigeria, as long as they keep giving us crude,” he stated.
However, the refinery is currently facing challenges in securing the necessary crude oil. According to the official, talks are ongoing with the Nigerian National Petroleum Company Limited and other oil producers to address this issue. He also warned that if the refinery has to import crude oil, it may be forced to export its refined products.
Global Demand for Dangote’s Fuel
Despite these challenges, the Dangote refinery is a major player in the global fuel market. It produces 75 million litres of petrol, 25 million litres of diesel, and 20 million litres of aviation fuel daily. Recently, the facility sold 12 cargoes totaling 456,000 tonnes of fuel to several African countries, including Côte d’Ivoire, Cameroon, Tanzania, Ghana, and Togo.
According to reports, the refinery is not only attracting interest from African nations but also from Europe, Asia, and South America. However, the current shortage of crude oil has forced the refinery to seek alternative sources outside of Nigeria.
During a live television program on Arise News, David Bird, the CEO of the Dangote refinery, revealed that the facility is purchasing Nigerian crude in foreign markets at a premium. This comes after the company initially requested the product locally before it was shipped abroad.
Bird explained that the refinery is receiving far less crude than agreed upon under the Federal Government’s naira-for-crude deal. Currently, the facility is only getting five cargoes of crude monthly instead of the expected 13 to 15. This shortfall has impacted the refinery’s ability to optimize local crude and has led to increased imports of feedstock from other countries.
Rising Diesel Prices in Nigeria
Meanwhile, Nigeria has experienced one of the sharpest increases in diesel prices globally, driven by tensions linked to the US-Iran conflict. According to data from InvestorSight, diesel prices in Nigeria rose by 78.3% since the start of the conflict, ranking the country second behind the Philippines, which recorded the highest increase of 81.6%.
The surge in diesel prices has had significant implications for industries, transporters, manufacturers, and businesses that rely on generators due to unstable electricity supply. The price of diesel in Nigeria has risen from N900 per litre to N1,600, prompting concerns about the economic impact.
Analysts have noted that rising diesel costs typically lead to higher logistics expenses, elevated production costs, and increased inflation as businesses pass on the burden to consumers. “As you can see, despite local refining, our prices in Nigeria are rising at a faster rate than in other countries. So, we are in a dilemma,” said a major marketer.
Some marketers have argued that fuel prices would have reached N3,000 per litre if not for the impact of the Dangote refinery. However, the current situation underscores Nigeria’s vulnerability to global fuel market disruptions, even though it is an oil-producing country.
