Report: How Dangote will cause petrol price hike, displace petrol imports by NNPC, marketers

Production from the Dangote Refinery is expected to replace Nigeria’s fuel and chemical imports in 2024, a report by the Economic Intelligence Unit (EIU) revealed.

The report predicted a temporary increase in Nigeria’s crude oil output from 1.12 million barrels daily in 2022 to 1.4 million barrels per day.

The Group attributed the projection for 2028 to recent developments in the Nigerian petroleum industry. These, the report said, include include:

1. The near completion of the Dangote

2. Refinery Stability in the Niger Delta

3. The complete commercialisation of Nigerian National Petroleum Company Limited (NNPC).

The EIU revealed Nigeria will further deregulate prices when the Dangote refinery comes onstream to replace imports from late 2024 to incentivise the refinery to sell locally rather than export its output.

Per the report, deregulated pricing will let NNPC begin operation as a commercial entity, according to the 2021 Petroleum Industry Act (PIA).

Investor confidence will increase as NNPC partnership increases

Alongside the PIA, the commercialisation of NNPC makes the forecast for hydrocarbon investment stronger, the report says.

The EIU reported that multinational venture partnerships with NNPC will be more confident about meeting cash calls.

The report revealed that oil output has been declining in the past decade but projects a gradual increase in production, from an average of 1.12 million barrels per day in 2022 to 1.4 million in 2028, BusinessDay said.

The increase will provide various operational challenges, especially in the Niger Delta.

Dangote refinery to begin production of diesel and aviation fuel

According to S&P Global Commodity Insights in September, the Dangote refinery would get its first cargo of crude in the next two weeks.

It would begin producing about 370,000 barrels of diesel and aviation fuel daily from October.

Devakumar Edwin, a senior executive director at the Dangote Group, said in a recent interview with S&P Global drafted a production timeline, stipulating crude and project flows, and stated the challenges to the project since 2013.

He said the refinery would launch in phases, starting with 350,000-370,000 barrels per day of diesel and aviation fuel by October, when the crude distillation unit, sulfur block, and hydrogen plant will be online.

By November 30, the refinery will start a gradual ramp-up of its 650,000 barrels per day production of petrol, a critical area of Nigeria’s fuel demand.

Dangote refinery to sell petrol to Nigeria in dollars, not naira

According to earlier reports, Dangote Refinery is gearing up to commence production after several delays since it was commissioned in May 2023.

Devakumar Edwin, the Group Executive of Dangote Refinery, disclosed that the facility would begin refining diesel and jet fuel by October 2023, while petrol would commence by November 2023.

In an interview with S&P Global Commodity Insights, Edwin noted that the company is ready and is waiting to receive its first crude to begin refining.