The Dangote oil refinery in Nigeria, Africa’s largest crude processing facility, is set to ship its first gasoline cargo out of the African region with a vessel heading for Asia, a source with knowledge of the plans told Reuters on Wednesday.
The cargo of 90,000 metric tons of gasoline is set to be loaded by independent oil trader Mercuria this coming weekend, according to the source.
The Dangote refinery, which began operations last year, has so far exported gasoline only to the West African region.
“We sell our products to those who are willing to give us the highest price. It’s the buyer’s right to take the products to any destination of their choice,” a spokesperson for the Dangote refinery told Reuters.
The 650,000-barrels-per-day refinery has been buying increasing volumes of U.S. crude WTI in recent months, for both logistical and technical reasons.
WTI offers higher yields of reformate and has better gasoline blending capabilities, Randy Hurburun, senior refinery analyst at Energy Aspects, told Bloomberg earlier this month.
Dangote began fuel production in 2024. The refinery started up in January last year with the launch of diesel and naphtha production and began producing gasoline in September.
The refinery, built by Africa’s richest person, Aliko Dangote, has a total processing capacity of 650,000 bpd, which makes it Africa’s biggest and one of the world’s largest crude processing sites.
The refinery is expected to meet 100% of Nigeria’s demand for all refined petroleum products and will also have a surplus of each of the products for export.
Dangote will also export polypropylene to the global markets under an exclusive partnership with petrochemicals distributor Vinmar International.
“This collaboration marks an important step in expanding the reach of high-quality polypropylene produced at Dangote’s new refinery and petrochemical complex in Lekki, Nigeria,” Vinmar International said.
In a move to address the economic strain faced by Nigerians, the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) has raised concerns about the pricing of petrol produced by Dangote Refinery. According to PETROAN’s spokesperson, Joseph Obele, the refinery’s current petrol pricing model is problematic, given the reduction in production costs to below N600 per liter. This decrease is largely due to the Federal Government’s “crude-for-naira” concession granted to Dangote Refinery, which has effectively minimized the input costs of crude oil for the facility.
A Call for Localized Pricing: Why International Market Rates Aren’t the Answer
The Dangote Refinery has positioned its petrol prices at international market levels, asserting that global rates should dictate domestic pricing. Obele and other industry stakeholders argue that this approach is both economically and ethically flawed. “The dynamics and the effects of the international market and Nigeria are not the same,” he emphasized during a recent broadcast on Nigeria Info FM 99.3. He believes that Dangote should price petrol based on local production costs plus a reasonable profit margin, rather than indexing it to global rates.
Nigeria, as an emerging market with significant socio-economic challenges, is vastly different from other nations where pricing policies are often guided by international norms. With high inflation and low minimum wages, setting petrol prices at international rates imposes unnecessary hardship on Nigerian citizens and businesses. The decision to adopt this pricing template fails to acknowledge the economic realities of Nigeria, where affordable energy is not just a commodity but an essential factor in daily life and economic growth.
Substantial Government Concessions Demand Consumer-Friendly Pricing
The Nigerian government has extended several generous concessions to Dangote Refinery over the course of its establishment. Not only has it received crude at significantly reduced rates, but it also benefited from foreign exchange concessions that were far more favorable than the official rate. These extraordinary supports were intended to foster a refinery that would drive affordable energy for Nigerians, ultimately providing relief from the high import-based fuel prices.
Joseph Obele criticized Dangote Refinery’s decision to overlook these benefits in its pricing model. “In a country where inflation is high and the minimum wage is poor,” he argued, “it is wrong for Dangote to base our petrol buying rate on the international market.” The concessions granted by the government signal a responsibility to prioritize Nigerian consumers in price-setting, aligning with national economic policies that aim to keep living costs manageable.
Economic Relief for Nigerians: An Immediate Need
The high cost of petrol affects every sector in Nigeria, as transportation, manufacturing, and goods prices are all tied to fuel costs. Reducing petrol prices to reflect lower production costs would create a ripple effect, potentially easing inflationary pressures and enhancing purchasing power for Nigerian households and businesses. In turn, this could foster a more stable economic environment, supporting growth and development across various sectors.
PETROAN’s stance reflects a growing call among industry players and consumers alike: that Dangote Refinery, having benefited significantly from local resources and concessions, must adjust its petrol pricing to meet local economic needs. The path forward, according to Obele, is clear. “Dangote should not have fixed his price on the international market,” he emphasized. “He should have fixed his price on cost of production plus the margin.”
Conclusion: An Opportunity to Set a New Standard
By aligning petrol prices with local production costs, Dangote Refinery has the opportunity to set a precedent in the oil and gas industry for pricing that respects both economic principles and social responsibility. Such a decision would underscore the refinery’s commitment to contributing to Nigeria’s economic resilience and could serve as a powerful example for other stakeholders in the sector.
As PETROAN and other industry players continue to advocate for this change, all eyes are now on Dangote Refinery to see if it will respond to these calls for a price adjustment that reflects the true cost of production and acknowledges the concessions it has received. A shift in this direction could mark a significant step toward a more stable, sustainable, and consumer-friendly fuel market in Nigeria.
Vitol Group, Trafigura Group and BP Plc are the dominant buyers of fuels from Nigeria’s giant new Dangote oil refinery near Lagos that’s reshaping petroleum trading in Africa and Europe.
The trio have accounted for the vast majority of the plant’s shipments since flows began ratcheting up around the middle of this year, according to data from Precise Intelligence, a new oil-and-gas trading analytics firm based in Geneva.
Once it’s fully up and running, Dangote should be able to process about 650,000 barrels a day of crude into products including gasoline and diesel. That will far exceed the fuelmaking capacity of any single plant in Europe or Africa, helping to reshape the regions’ oil and fuel trading. The emergence of Dangote has already trimmed a glut of Nigerian crude.
Since starting up, the refinery has loaded almost 6 million tons of fuel, Precise’s data show. That’s equivalent to almost 45 million barrels. Loading rates averaged about 35,000 tons a day in October, its data show.
Dangote itself said late last month that the refinery had reached processing rates of about 420,000 barrels a day of crude. The plant is also selling into the Nigerian market.
Vitol and Trafigura declined to comment. Dangote and BP didn’t respond to requests to comment.
The composition of fuel cargoes loading from Dangote is closely watched because it offers clues into where the refinery is at in terms of starting up different processing units.
Precise’s figures show that automotive gasoil — diesel — is the biggest cargo type being lifted, followed by fuel oil. Together, they account for more than 60 percent of what’s being collected from the plant. Other fuels include gasoline and jet fuel.
In a significant development for the global oil and gas industry, Nigerian oil giant Oando Plc has been shortlisted as one of three final contenders to acquire Trinidad and Tobago’s state-owned Petrotrin refinery. This announcement was made by Trinidad’s Finance Minister, Colm Imbert, during his presentation of the country’s national budget on September 30, 2024. Oando is competing alongside two other bidders: the CRO Consortium, composed of three Trinidadian companies, and U.S.-based INCA Energy.
The bidding process, which started in February 2024, was overseen by U.S.-based Scotia Capital, which invited “expressions of interest” from potential buyers. Out of ten initial proposals, Oando and the two other companies emerged as the final contenders. The Trinidadian government will now move forward with a formal Request for Proposals (RFP) to determine the winner, with the aim of restarting the refinery if deemed feasible.
The Petrotrin refinery, located in Pointe-a-Pierre, has been closed since 2018, primarily due to significant financial losses, which reached $2 billion per year before its shutdown. As of the last audit, the refinery’s accumulated losses totaled $15 billion, while the country carries $3 billion in public debt on behalf of the company. When operational, Petrotrin was a key supplier of oil products to the Caribbean region, and its closure has had a considerable impact on Trinidad and Tobago’s energy sector.
Minister Imbert outlined that proposals were assessed on five key criteria, including a clear restart plan and timeline, asset integrity assessments, utility requirements, sources of crude supply, and a viable financing plan. The government also emphasized the importance of securing an agreement with Paria, the state oil company, to protect national interests and ensure fuel security.
Oando Plc, fresh off its $783 million acquisition of Nigerian Agip Oil Company in August, is well-positioned for this next potential acquisition. The Agip deal significantly increased Oando’s stake in Nigerian joint venture assets, giving the company control over 40 oil and gas fields, 24 of which are producing. Securing the Petrotrin refinery would be a strategic move for Oando, as it continues to expand its presence in the global oil and gas market.
Trinidad and Tobago, much like Nigeria, is a crude oil producer that depends heavily on imported petroleum products. Reviving the Petrotrin refinery could not only reduce this dependence but also restore its historical role as a major energy supplier to the Caribbean.
This potential acquisition marks a pivotal moment for Oando and the future of energy production in the Caribbean. As the global oil landscape evolves, the final outcome of this bidding process will be closely watched by industry experts and stakeholders alike.
Aliko Dangote, President/CEO of Dangote Industries Limited, joined 44 other prominent global thought leaders, statesmen, and intellectuals at the Bretton Woods Conference in New Hampshire, USA, on September 26-27, 2024. This high-level retreat, marking 80 years since the establishment of the IMF and World Bank, was led by IMF’s Kristalina Georgieva and World Bank’s Ajay Banga. The meeting aimed to reflect on the origins of the Bretton Woods institutions and discuss their future direction amidst evolving global economic challenges.
