Dangote refinery’s petrol set to meet U.S. standards, boost local supply

Aliko Dangote, President of the Dangote Group, has announced that the Premium Motor Spirit (PMS) produced by Dangote Refinery will meet the quality standards found in the United States and other global markets.

This statement was made during a press conference on Tuesday, marking the official start of petrol production at the facility, which has a capacity of 650,000 barrels per day.

Dangote highlighted the refinery’s ability to produce high-quality petrol, showcasing a sample described as “clean” and emphasizing its potential benefits for engine longevity. The refinery is expected to serve not only Nigeria but also meet the demands of Sub-Saharan Africa.

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The new refinery, situated near Lagos, is anticipated to process 650,000 barrels of oil daily at full capacity, with a substantial portion dedicated to petrol production. At peak output, the facility is projected to produce approximately 330,000 barrels of petrol per day, contributing over 1% to the global daily demand of around 27 million barrels.

Despite the ambitious production goals, immediate results may vary. Energy Aspects Ltd. forecasts an initial production of about 90,000 barrels per day in the fourth quarter, with a potential increase to nearly 250,000 barrels per day in the latter half of the following year, dependent on the activation of additional refinery units.

The Dangote Refinery’s startup follows numerous delays and ongoing issues with Nigeria’s existing refineries, which have struggled to remain operational. Nigeria has been heavily reliant on imported petrol, spending over $10 billion annually on these imports.

The refinery’s introduction is expected to reduce Nigeria’s dependency on foreign petrol and alleviate local fuel shortages. This is particularly timely given the Nigerian National Petroleum Company Limited (NNPCL) faces financial difficulties that have affected its ability to maintain fuel supplies.

Additionally, the Federal Executive Council’s arrangement to supply crude oil to the Dangote Refinery in naira is anticipated to reduce the country’s foreign exchange demand by approximately 40%, contributing to greater stability for the naira.

The refinery has begun processing petrol after overcoming recent crude shortages. According to reports, the Nigerian National Petroleum Company Limited will be the primary purchaser of the petrol, though there are plans to export any surplus if local demand is insufficient.

The commencement of petrol production at the Dangote Refinery is expected to significantly impact Nigeria’s fuel market, providing relief from current shortages and influencing both local and global fuel trade dynamics.