Reports show that Nigeria is on track to achieve an eight-year low in gasoline imports, as the nation’s new flagship refinery gradually replaces foreign suppliers, signaling a major move toward fuel independence. According to data gathered by Bloomberg from analytics company Vortexa Ltd., between January 1 to 24, shipments into Nigeria totaled almost 110,000 barrels per day. If this trend persists, January’s total imports will be the lowest since 2017, indicating a significant shift in Nigeria’s energy environment. Nigeria, the biggest producer of crude oil in Africa, has ironically been dependent on imported refined Petroleum products for decades due to the inefficiency of its state-owned refineries.
The completion of the refinery, a flagship project of over US$19 billion, is reversing this trend by lowering dependency on petroleum imports and increasing domestic refining capacity. The facility’s 650,000 barrels per day processing capacity makes it not just the biggest refinery in Africa but also more capable than the ten largest refineries in Europe, including the Pernis Refinery, which has an installed capacity of 404,000 barrels per day. Impact of the Dangote Refinery are already being noticed beyond Nigeria.
Potential economic benefits of increased domestic refining capacity.
Its operations have already lessened Nigeria’s reliance on imported gasoline, which has long been a major drain on the nation’s foreign reserves. Dangote began producing diesel and Aviation fuel in January 2024, and petrol in September, with products supplied to the domestic market, positioning Nigeria to cut back significantly on imports. The expansion of the Dangote Refinery has been bolstered by key government policies aimed at strengthening Nigeria’s domestic refining capacity. One significant move has been the decision to sell crude oil to the Dangote Refinery and various local firms in Naira rather than foreign currency.
Additionally, the federal government has introduced a new system that allows petroleum marketers to source Premium Motor Spirit (PMS) directly from the Dangote Refinery. This reform bypasses the Nigerian National Petroleum Company Limited (NNPCL), streamlining fuel distribution and improving market efficiency. By enabling direct access to locally refined products, this policy aims to reduce fuel import dependence, lower costs, and enhance supply chain efficiency within Nigeria’s energy sector. The Organization of the Petroleum Exporting Countries (OPEC) revealed that Nigeria’s growing domestic refining capacity is starting to upend the European oil market, which has historically relied on exporting gasoline to Africa.
Smaller refineries collectively reduce fuel imports.
Economists forecast that the refinery’s full capacity may drastically cut or even eliminate the $17 billion gasoline Trade between Europe and Africa. Many people consider the development to be a game-changer for Nigeria. The nation can strengthen its currency, increase energy security, and save billions of dollars in foreign exchange by lowering its dependency on gasoline imports. Additionally, the refinery’s operations may result in a drop in domestic fuel prices, which would help customers who have long suffered from excessive energy expenses.
Alongside Dangote’s refinery, several other smaller refineries are contributing to Nigeria’s growing refining capacity. In December 2024, the Warri Refining & Petrochemical Company, which had been idle for almost ten years, was revitalized. This represents a critical turning point in the nation’s attempts to revitalize its domestic refining industry. Similarly, one of Nigeria’s most significant refineries, the Port Harcourt Refinery, reopened in late 2024 and is currently processing about 20,000 barrels per day with aspirations to reach its full capacity of 210,000 barrels per day.
Related Article: FG permits marketers’ access to Dangote fuel
While these smaller refineries may not match the scale of Dangote’s operations, they collectively contribute to reducing Nigeria’s reliance on imported fuel. This shift is a significant victory for Nigeria, which has long struggled with fuel supply disruptions and economic inefficiencies due to its dependency on imported refined products. By diversifying and enhancing its refining sector, Nigeria is gradually transitioning from a fuel importer to a self-sufficient energy powerhouse. This transformation is not only beneficial for the Economy but also offers hope for energy stability across the West African region.