LAGOS, Nigeria (VOICE OF NAIJA)-The Dangote Petroleum Refinery, with a capacity of 650,000 barrels per day, is capitalizing on cheaper oil imports from the United States to fuel up to one-third of its operations as it commences production.
According to a report by Bloomberg released on Thursday, the refinery has begun shipping products in recent weeks while preparing two units to enable gasoline production, a move that analysts believe will significantly impact the fuel market in Nigeria and the broader region.
“Dangote is going to influence Atlantic Basin gasoline markets this summer and for the rest of the year,” said Alan Gelder, Vice President of Refining, Chemicals, and Oil Markets at the consultancy firm, Wood Mackenzie.
He added, “When the RFCC comes online, that’ll really shake things up because it alters the West African gasoline supply balance,” referring to a residue fluid catalytic cracking unit that upgrades heavier products.
Analysts at WoodMac, FGE, and Citac estimate that the refinery is currently operating at approximately 300,000 barrels per day, which is nearly half of its nameplate capacity. Additionally, the complex has begun shipping jet fuel, gasoil, and naphtha as it expands its range of products to a full slate.
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While Wood Mackenzie anticipates that the gasoline-focused units will be operational by summer, other analysts project that the RFCC might not be operational until the end of the year.
Dangote Industries previously announced that gasoline deliveries would commence in May. However, a company spokesperson has yet to respond to inquiries.
“The refinery is already having a sizable impact on product markets even running in its most stripped-back form at minimum rates,” said Ronan Hodgson, an energy analyst at FGE. Units that boost diesel quality will also start up in the coming months.
On April 17 VONa reported that the refinery announced a slash in the price of diesel from N1,200/litre to N1,000/litre, a development that was welcomed and has sparked excitement by oil marketers
Dangote refinery announced this in a statement by its spokesperson, Tony Chiejina.
The statement read in part, “In an unprecedented move, Dangote Petroleum Refinery has announced a further reduction of the price of diesel from N1200 to N1,000/litre.
“While rolling out the products, the refinery supplied at a substantially reduced price of N1,200/litre three weeks ago, representing over 30 per cent reduction from the previous market price of about N1,600/litre.
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“This significant reduction in the price of diesel at Dangote Petroleum Refinery is expected to positively affect all the spheres of the economy and ultimately reduce the high inflation rate in the country.”
According to Bloomberg’s report on Thursday, up to one-third of the oil delivered to the large refinery has been US-grade WTI Midland, according to shipping information compiled by the media house.
According to the report, this trend of using foreign oil may persist as long as it remains cheaper than local supplies. However, the report suggests that Dangote’s operations could alter this dynamic.
Earlier this week, Nigeria introduced new regulations mandating its oil producers to supply crude to local refineries, aiming to reduce the nation’s dependence on imported refined products. The specifics of how much each refinery will be required to procure are yet to be clarified.
The Federal Government’s decision to sell crude to local refiners coincided with an announcement that refineries could now buy crude using either the local currency, the naira, or the United States dollar.