Dangote Refinery too big to fail, will take months to start—Analysts

Maureen Aguta

Analysts have revealed that it would take months before Dangote Refinery finally commences full-scale production They said the production would likely be in phases with the crude distillation unit being the first unit Meanwhile, sources have revealed NNPC as the main supplier of domestic crude to the refinery.

Dangote Refinery is still several months from full-scale production of fuels including high-quality gasoline, analysts tracking the refinery’s development have said. In a Bloomberg report, they said the full ramp-up of Africa’s largest oil refinery is still a long way to go. This comes after the plant recently concluded a deal to receive six million barrels of crude from December. Analysts expects that the refinery is likely to be started up in a phased fashion.

An analyst at Facts Global Energy, said that the refinery is likely to kickstart in a phased fashion, with the crude distillation unit being the first unit. He also predicted that the plant would not start production of fuel oil and other lower-quality petroleum products until the second half of next year. Hodgson said there might not be a substantial or useful product from the Dangote refinery in December.

According to James McCullagh, executive director of Citac Africa Ltd., a company that specialises in the downstream oil business on the continent, feedstock selection would have a significant impact on yields in the initial stage. He, however, predicted that some straight-run products, such as naphtha and fuel oil, would probably be exported. He explained that the plant’s financiers include numerous banks and “it is too big to fail, so it is a question of when, not if, it will begin commercial operations in some form.

The Group executive director of Dangote Industries Ltd., Devakumar Edwin, was not particularly specific on the date of full-scale production commencement. He stated that it would be false to claim that a full ramp-up will take months or that the first phase’s primary products will be fuel oil and naphtha. “As the saying goes, the proof of the pudding is in the eating,” he said. Sources earlier disclosed that the Nigerian National Petroleum Company Limited (NNPC) is the main supplier of domestic crude to the refinery. They predicted that the refinery’s initial intake would include major Nigerian streams such as Bonny Light, Forcados, and Egina, and subsequently run a full range of crude grades.

The refinery earlier announced that it was set to finally commence refining operations by October 2023.

Earlier, Legit.ng reported that Dangote Refinery announced plans to commence production following several delays after it was commissioned in May 2023. Devakumar Edwin, the Group Executive of Dangote Refinery, disclosed that the facility would begin refining diesel and jet fuel by October 2023, while petrol would commence by November 2023. Edwin, speaking in an interview with S&P Global Commodity Insights, noted that the company was waiting to receive its first crude to begin refining.