Highlights the need to boost crude oil production to support new refining capacity.
- Nigeria needs to boost refining capacity by 1.5 million barrels per day, driven by robust government support and investor incentives.
- The Dangote Refinery meets local diesel and jet fuel demand and plans to scale up PMS production for global export.
Aliko Dangote, Chairman of Dangote Refinery has emphasized that Africa can become self sufficient in petroleum products supply and consumption; as well as position itself as a key player in global downstream trade flows.
During his keynote speech titled “Making Nigeria a Net Exporter of Petroleum Products” at the ongoing Coran Summit in Lagos, he highlighted the critical changes on the horizon for Nigeria’s refining industry.
“I am delighted to be here and thank the organizers for allowing me to share my thoughts on Nigeria’s potential as a refining hub,” Dangote stated. “A few years ago, the idea of Nigeria becoming a net exporter of refined petroleum products seemed unattainable. Despite being Africa’s largest crude oil producer, the country has long relied on imports to meet its refined product needs. However, we are now on the verge of transforming from a net importer to a net exporter.”
This transformation, according to Dangote reflects significant progress for both the industry and the nation. Dangote expressed gratitude for the support of President Bola Ahmed Tinubu, which has been instrumental.
With new developments in the refining sector and a focus on local production, Africa stands at a pivotal moment to capitalize on its resources and enhance its position in the global market.
Dangote elaborated on several factors driving the emerging narrative regarding the petroleum industry:
Global Demand Shift
Export Ban: A ban on low-quality petroleum product exports from Belgium and Holland to Africa is pushing refineries to upgrade or seek new markets.
Rising Carbon Tariffs: European carbon tariffs are projected to increase significantly, from €0.15 per barrel in 2020 to €2.05.
Shifting Demand: An aging population and increased electric vehicle adoption are slowing gasoline demand growth in developed nations, while developing regions, especially Africa, will see rising demand.
These changes, according to Dangote, are squeezing profit margins for refiners.
A 2024 Global refinery threat analysis by Wood Mackenzie which predicts the closure of several European and Chinese refineries, including Scotland’s Grangemouth next year and Shell’s conversion of a German facility to lubricant production, could turn out to be a game change for refining in Africa.
Opportunities in Africa
Africa imports around 3 million barrels of petroleum products daily, primarily from Europe and Russia, valued at about $17 billion in 2023. However, Nigeria can provide these products more competitively due to shorter transport distances and reduced logistics costs.
Seizing the Opportunity
Stopping the practice of mortgaging crude is essential. While Norway invests oil proceeds for the future, Africa must avoid depleting its resources. Domestic crude supply obligations should be prioritized.
Concluding his keynote speech, Dangote stated that by addressing the factors outlined, Nigeria can transform its petroleum sector and secure economic growth.
