LAGOS — Dangote Petroleum Refinery and Petrochemicals has said rising petrol imports into Nigeria are forcing it to redirect more refined products to regional and international markets, despite its capacity to meet and exceed the country’s domestic Premium Motor Spirit (PMS) requirements.

The refinery said the continued issuance of import licences for petroleum products has introduced significant uncertainty into the domestic fuel market, making it increasingly difficult to forecast demand, manage inventories and optimise production for the Nigerian market.

According to market data available to the refinery, imported PMS accounted for about 43% of petrol supplied into Nigeria in July, raising questions over the scale of continued imports at a time when the country has significantly expanded its domestic refining capacity.

Dangote Refinery said the development does not reflect a shortage of locally refined petrol or a weakening of its commitment to the Nigerian market. Instead, it said the growing exports are an operational response to the uncertainty created by unpredictable import volumes.

Dangote says excess inventory is driving exports

Since beginning operations, the 650,000-barrel-per-day Dangote refinery has maintained substantial product inventories and reserved volumes to ensure uninterrupted domestic supply, according to the company.

That strategy requires significant spending on storage, logistics and working capital. But the refinery said maintaining large inventories becomes commercially difficult when it has limited visibility over how much imported petrol will enter the market.

“As a responsible energy provider, we have always endeavoured to keep adequate reserves to satisfy local demand at all times,” the refinery said.

“However, in an environment where significant volumes of imported PMS continue to enter the market through licences issued by the regulator, and where there is limited visibility on future import volumes, it becomes commercially unsustainable to continue holding excess inventory indefinitely.”

The refinery said products that are not immediately absorbed by the domestic market must eventually be moved out to prevent inventories from becoming unnecessarily expensive to finance and store.

As a result, it has increasingly turned to exports to regional and international markets.

Exports do not signal shortage, refinery says

Dangote Refinery stressed that the increase in exports should not be interpreted as evidence that it is unable or unwilling to supply Nigeria.

Rather, the company said exports provide an outlet for surplus production when domestic demand is difficult to predict because imported fuel continues to compete with locally refined products.

The shift also reflects the commercial realities of operating a large-scale refinery in a market where supply and demand signals can change rapidly.

For the refinery, producing continuously while maintaining large inventories carries financial costs. If imported petrol subsequently captures a substantial share of domestic demand, locally refined products can remain in storage longer than planned.

Exporting the surplus allows the refinery to free storage capacity, reduce inventory carrying costs and maintain operational flexibility.

The company said this strategy also enables it to continue operating at scale while remaining prepared to respond to domestic demand when market conditions require additional supply.

Import policy raises wider questions for Nigeria

The refinery’s position comes amid a broader debate over the future structure of Nigeria’s downstream petroleum market following the emergence of significant domestic refining capacity.

For years, Nigeria relied heavily on imported refined petroleum products because domestic refineries were unable to consistently meet national demand. That dependence exposed the country to international price movements, foreign-exchange pressures, shipping costs and periodic supply disruptions.

The commissioning of the Dangote refinery has changed that equation by introducing one of the world’s largest single-train refineries into the Nigerian market.

The refinery’s management argues that continued large-scale petrol imports, alongside substantial domestic production, could weaken the economic benefits expected from Nigeria’s investment in local refining.

Greater reliance on domestic refining could potentially reduce pressure on foreign exchange, deepen local industrial capacity, improve supply security and create opportunities for Nigeria to become a net exporter of refined petroleum products.

But the transition also creates a more competitive market in which refiners, importers, marketers and regulators must determine how much product is required, when it should be imported and how domestic production should be integrated with external supplies.

Dangote seeks greater market visibility

The refinery is therefore calling for greater transparency over the volume of petroleum products expected to enter Nigeria through import licences.

It said better information on anticipated imports would allow local refiners to plan production more accurately, optimise inventories and avoid accumulating products that may not find immediate buyers.

Improved market coordination, it argued, would also reduce unnecessary storage and financing costs while allowing domestic refining capacity to operate more efficiently.

Dangote said any future petrol shortages arising from distorted market signals or poor demand forecasting should not automatically be attributed to the refinery, particularly when it has demonstrated the ability to maintain adequate supplies.

The company reiterated that it remains “ready, willing and able” to meet and exceed Nigeria’s petroleum product requirements.

Nigeria’s refining ambitions face a market test

The dispute highlights a central challenge facing Nigeria’s downstream oil sector: how to balance market competition with the economic objective of building a sustainable domestic refining industry.

For consumers, the priority remains reliable fuel availability at competitive prices. For refiners, predictable demand is critical to justifying billions of dollars in capital investment and maintaining large-scale operations. For government, the stakes include energy security, foreign-exchange conservation, fiscal revenues and the development of a competitive petroleum industry.

Dangote Refinery said policies that provide greater market transparency and coordination would help Nigeria maximise the benefits of its expanding domestic refining capacity.

The company also called for policies that support local refining, strengthen energy security, conserve foreign exchange and ensure that the country’s investments in refining translate into broader economic gains.

With imported PMS estimated to have accounted for about 43% of July’s market supply, the competing roles of imports and domestic refining are likely to remain a key issue for Nigeria’s downstream petroleum industry as the country seeks to move from a major importer of refined products towards becoming a significant exporter.