The Dangote Petroleum Refinery is increasing its crude oil storage capacity by constructing eight additional tanks, adding 6.29 million barrels (approximately 1 billion liters) to its existing reserves. This expansion reflects the refinery’s efforts to counter unreliable local crude supplies by stockpiling imported oil.
Enhanced Storage Capacity
The refinery, valued at $20 billion, currently operates 20 crude storage tanks, each with a capacity of 120 million liters, totaling 2.4 billion liters. With the completion of the additional tanks, the refinery’s crude storage capacity will increase by 41.67%, reaching 3.4 billion liters.
The Vice President for Oil and Gas at Dangote Industries, Devakumar Edwin, explained the rationale for this move:
“Importing crude from other countries instead of buying locally means that our crude stockpiles will have to be higher. So we have started building eight additional crude tanks to hold a billion liters, over and above our original storage capacity. Four of them are nearing completion.”
Local Supply Challenges
Nigeria’s crude oil supply has been constrained due to underinvestment, pipeline vandalism, and theft, leading to production disruptions. The Nigerian National Petroleum Company (NNPC), which supplies crude to local refineries, has also faced challenges in meeting commitments to facilities like the Dangote refinery. Edwin noted that crude oil supply from the NNPC to the refinery remains “very low.”
Operations and Output
Since commencing operations in January 2024, the Dangote refinery has been producing diesel and aviation fuel, with petrol production starting in September. Its products are supplied to the domestic market and exported internationally.
Shift from Naira-for-Crude Deal
The decision to boost storage for imported crude may signal a shift away from the naira-for-crude policy initiated by President Bola Tinubu in August 2024. Under this policy, the NNPC sold 450,000 barrels of crude oil for local consumption in naira, with the Dangote refinery serving as a pilot program.
Despite the policy, crude shortages had previously hampered refinery operations. Alhaji Aliko Dangote, President of the Dangote Group, alleged sabotage by international oil companies unwilling to supply crude oil to the facility.
Outlook
With Nigeria’s crude production recently reaching 1.45 million barrels per day (close to its 1.5 million OPEC quota), the addition of storage capacity positions the Dangote refinery to navigate local supply uncertainties while maintaining its production capabilities. This development highlights the refinery’s strategic shift toward securing imported crude oil to ensure operational stability and market supply.
