Dangote Refinery Short of Nigerian Crude, a Major Challenge for the Sector

Despite its potential, the Dangote refinery is struggling to secure the necessary volumes of Nigerian crude, revealing flaws in the country's regulatory and supply mechanisms.
cuve et logo Dangote

Partagez:

The Dangote refinery, one of the largest in Africa with a capacity of 650,000 barrels per day, faces a crucial challenge: insufficient supply of Nigerian crude.
Although regulations require producers to prioritize supplies to local refineries, Dangote is unable to obtain the volumes needed to operate at full capacity.
In September, of the 15 cargoes required, only six were allocated by the Nigerian National Petroleum Corporation (NNPC), exposing the refinery to the risk of under-performance.
The supply problem is exacerbated by the demands of international oil companies (IOCs), which charge premiums of $3 to $4 per barrel to supply Nigerian crude.
These difficult conditions are forcing Dangote to consider import alternatives, increasing operating costs and further complicating cash flow management, already impacted by the depreciation of the naira.

A major challenge for production

The situation highlights dysfunctions in the application of domestic supply obligations by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
Dangote has expressed concern about the ineffectiveness of these regulations, pointing out that the refinery could be forced to cut production if crude supplies do not improve.
A key factor in this crisis is NNPC’s underperformance in deliveries, which stand at 82,000 barrels per day instead of the 300,000 forecast.
As a result, the refinery’s production targets, which aim to reach 85% of installed capacity by the end of the year, are under serious threat.
This situation also highlights the growing tensions between the various players in the sector, who have to navigate an increasingly complex environment.
Recourse to crude imports, mainly from the USA with WTI Midland, adds a further layer of complexity.
Dangote has already imported around 15 million barrels of this crude to maintain its operations.
This dependence on imports, while a temporary solution, cannot be a long-term strategy for the refinery, given the high costs and risks associated with international market fluctuations.
Losses linked to naira fluctuations, amounting to around 2.7 trillion naira for the year 2023, underline the urgency of finding sustainable solutions.
The Nigerian government recently authorized the purchase of 450,000 barrels of crude oil in naira, with the aim of reducing the impact of local currency fluctuations on refinery operations.
However, this measure does not fully compensate for the challenges facing Dangote.
The evolution of the Nigerian oil sector and the refinery’s future performance will largely depend on the ability of regulators to enforce domestic supply obligations, and on cooperation between the various players.
The success of the Dangote refinery is crucial not only for the company itself, but also for Nigeria’s entire oil value chain and the country’s energy ambitions.

After several months of interruption following a major political upheaval, Syria's Banias refinery has shipped its first cargo of refined products abroad, marking a partial revival of its energy sector.
ExxonMobil and its partners have extended the production sharing contract for Block 17 in Angola, securing the continued operation of major infrastructure in a key offshore asset for Africa’s oil sector.
Egypt’s General Petroleum Company discovers a new oil field in Abu Sannan, producing 1,400 barrels per day, confirming growing interest in this mature Western Desert region.
The South Sudanese government is collaborating with Chinese group CNPC to reactivate several major oil fields, aiming to stabilise national production affected by political instability and ongoing technical difficulties.
TotalEnergies takes 25 % of a portfolio of 40 exploration permits on the US Outer Continental Shelf, deepening its partnership with Chevron in the Gulf of Mexico’s deepwater.
OPEC confirms global oil demand estimates for 2025-2026 despite slightly adjusted supply, while several members, including Russia, struggle to meet their production targets under the OPEC+ agreement.
Facing anticipated refusal from G7 countries to lower the Russian oil price cap to $45, the European Union weighs its options, leaving global oil markets awaiting the next European sanctions.
Starting August 15, the Dangote refinery will directly supply gasoline and diesel to Nigerian distributors and industries, expanding its commercial outlets and significantly reshaping the energy landscape of Africa's leading oil producer.
The sudden appearance of hydrocarbon clusters has forced the closure of beaches on the Danish island of Rømø, triggering an urgent municipal investigation and clean-up operation to mitigate local economic impact.
Canadian company Cenovus Energy has fully resumed oil sands production at its Christina Lake site following a wildfire-related shutdown in Alberta.
Argentine company Compañía General de Combustibles is starting operations in the Vaca Muerta shale basin while boosting heavy crude production due to strong local demand and rising prices.
Oil-backed financing is weakened by falling crude prices and persistent production constraints in the country.
Italiana Petroli, in negotiations with three potential buyers, is expected to finalize the total sale of the group for around €3 billion by late June, according to several sources close to the matter speaking to Reuters on Thursday.
ExxonMobil has been named the most admired upstream exploration company in Wood Mackenzie’s latest annual survey, recognised for its performance in Guyana and its ability to open new resource frontiers.
Petronas' workforce reduction reignites questions about internal trade-offs, as the group maintains its commitments in Asia while leaving uncertainty over its operations in Africa.
The Kremlin condemns the European proposal to lower the price cap on Russian oil to $45 per barrel, asserting that this measure could disrupt global energy markets, as the G7 prepares for decisive discussions on the issue.
Libya's oil production reached a twelve-year high of 1.23 million barrels per day, even as persistent political tensions and violent clashes in Tripoli raise concerns about the sector's future stability.
According to a study published by The Oxford Institute for Energy Studies, two competing financial algorithms, Risk-Parity and Crisis Alpha, significantly influence oil markets, weakening the traditional correlation with the sector's physical fundamentals.
Norwegian producer DNO ASA completed an oversubscribed $400mn hybrid bond private placement to support the integration of Sval Energi Group AS.
The Brazilian oil group secured approval from Abidjan to begin negotiations for exploring nine deepwater blocks as part of its business partnerships strategy in Africa.