[The African Monetarist]

Inside Africa’s

Largest Oil

Refinery: An

Analysis of

Nigeria’s Dangote

Refinery:

 

 

 

 

 

 

 

Nigeria’s massive Dangote oil refinery, the largest in Africa, has the potential to end a longstanding $17 billion per year gasoline trade between Europe and Africa. Commencing production in January 2024, the refinery represents a $20 billion investment and boasts a refining capacity of up to 650,000 barrels per day (bpd). Once it reaches full capacity, anticipated either this year or next, it will be the largest refinery in both Africa and Europe.

 

The Dangote refinery is considered pivotal in Nigeria’s pursuit of energy independence. Despite being Africa’s most populous country and its leading oil producer, Nigeria imports nearly all its fuel due to insufficient refining capabilities.

 

Key Points:

 

1. Economic Impact:

 

The 650,000 bpd Dangote refinery, the largest of its kind in Africa, is expected to revolutionize Nigeria’s economy. It aims to significantly reduce the country’s dependence on imported fuel.

 

2. Production Phases:

 

Initial production will focus on diesel and aviation fuel, with plans to expand to petrol output subsequently.

 

3. Current Reliance on Imports:

 

Despite its status as one of Africa’s top oil producers and West Africa’s largest economy, Nigeria heavily relies on imported fuel and diesel due to inadequate domestic refining capacity. This dependency has historically strained Nigeria’s foreign exchange, particularly during periods of reduced oil revenues and foreign currency shortages.

 

4. Company Statement:

 

According to Dangote Petroleum Refinery, the facility can meet 100% of Nigeria’s refined product needs, including gasoline, diesel, kerosene, and aviation jet fuel. Furthermore, the refinery is expected to produce a surplus for export to neighboring countries.

 

5. Location and Investment:

 

Situated on 2,635 hectares (6,500 acres) within the Lekki Free Zone near Lagos city, the refinery’s construction cost an estimated $20 billion.

 

Additionally, Nigeria is a member of the African Continental Free Trade Area (AfCFTA), which could enhance the refinery’s impact on regional trade and economic integration.

 

 

 

[Author]

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