Oil and Gas analysts have commended the effort of Dangote Refinery for giving a timeline as to when it will start operation, saying however, it is not unexpected that it will start with imported crude.
They said that with the current situation, even the government refineries may end up being fed with imported crude oil.
The Dangote Refinery had in an interview with S&P Global commodity Insight stated that it will start production with 370,000 barrels of crude per day of diesel and jet fuel, imported, in October.
Dangote Group Executive Director, Devakumar Edwin had said the refinery, which outgoing president Muhammadu Buhari officially inaugurated in May, will launch in phases, beginning with 350,000-370,000 b/d of diesel and jet fuel by October, when the crude distillation unit, sulfur block and hydrogen plant should be online. Then on Nov. 30, he said, the refinery will start the phased ramp-up to 650,000 b/d, around half of it gasoline, the key area of Nigerian fuel demand.
Although the refinery was designed to process light sweet Nigerian crude, state-owned Nigerian National Petroleum Corp, which is a shareholder in the project, cannot supply the refinery until November, Edwin said, so Dangote is buying oil from trading houses. Vitol and Trafigura recently carried out inspections of the plant, he said.
Reacting to this development, an energy and Public Affairs Analyst, Dan Kunle, said: “ The above situation was long expected. Because of the poor and low investment in the Upstream oil and gas production. The reality and the hard truth is that Nigeria may end up importing crude oil to feed her refineries in the next three to five years. Dangote Refinery can not rely on the local crude oil productions from NNPC Ltd. Crude oil supply guarantees are essential to the operation of a refinery. Is not a piecemeal operation. It is a continuous operation, seamless and uninterrupted. Nigeria may also still import Gas, LPG and LNG.
The FGN must put a rescue team in NNPC and the hydrocarbons industry if we are not to lose out completely. Very worrisome situations are looming in the Industry.
“Furthermore, will Nigeria not be better positioned if she can import Electricity steadily from anywhere? As long as you get regular supplies and the quality and quantity come to you regularly. That is the spirit of globalization. Get what you need from anywhere in the world cheaply and timely.
“ Our situation in Nigeria is that we lost Competitive advantages, even though we have comparative advantages in many ways. We must give a Big Credit to Aliko Dangote for actualizing our comparative and competitive advantages in Limestone Cement production in Nigeria. I felt the pain every day, whenever I look at all the Critical foundational heavy industries we have lost out. Without those Catalytic Industries, you can not build a great and powerful industrialized country. Such industries are Steel, Foundries, Petrochemicals, deep Sea Ports, Optic fiber Networks and Human Capital Development. Until we see the new Core Group that President Tinubu will put together to shape out this political economy, nothing can be said. I remain optimistic PBAT will Act swiftly.
S&P Global analysts predict the refinery will not hit full operating capacity until mid-2025, according to a recent note, with further delays still possible. Still, forecasts from S&P Global suggest Nigerian gasoline production will exceed imports until the 2040s as a result of the refinery.