The Dangote Refinery is planning a big change — it wants to use only crude oil produced in Nigeria by the end of 2025. This will stop the need to import oil from other countries and help boost the local oil market.
A recent Bloomberg report said that in June, about half of the oil used by the refinery came from Nigerian suppliers. As time goes on and contracts with foreign oil companies come to an end, more local oil will be available for the refinery.
Devakumar Edwin, a senior official at Dangote Industries, explained that many long-term contracts with foreign suppliers will soon expire. He believes the refinery will switch fully to Nigerian oil before 2025 ends.
The main reason for building the refinery was to help Nigeria stop sending its crude oil abroad to be refined, only to buy it back at higher prices. That process has been wasteful and full of corruption.
Since it began operations, the Dangote Refinery has already helped Nigeria become an exporter of refined petroleum. However, at first, it still needed to bring in a lot of crude oil from other countries because Nigerian suppliers couldn’t meet all the demand.
One of the problems Nigeria has faced is that many big international oil companies have left the country’s onshore oil fields. These fields are now managed by smaller local companies that often don’t have enough money or resources to supply oil at the needed scale.
Other challenges include oil theft, vandalized pipelines in the Niger Delta, and contracts with foreign companies that tie up available crude oil.
Right now, the refinery processes around 550,000 barrels of oil every day.
Since opening, it has bought oil from countries like Brazil, Angola, Ghana, and Equatorial Guinea. But Edwin says that the relationship between Dangote Refinery, local suppliers, and the Nigerian government is improving. This should help ensure more oil is sourced locally.
To make the full switch to Nigerian crude, the refinery needs a large increase in domestic supply over the next few months. In June, 53% of its crude came from Nigeria, while the remaining 47% was imported from the United States.
Dangote is set to receive five shipments from Nigeria’s national oil company in July and another five in August. Each of these shipments contains nearly one million barrels of crude.
The Dangote Refinery, which officially opened in May 2023, was designed to help end Nigeria’s fuel shortages.
During a recent visit, the President of the ECOWAS Commission, Dr. Omar Alieu Touray, called the refinery a symbol of hope for Africa. He praised it as an example of how private companies can help grow industries across the continent.
