Aliko Dangote, Africa’s richest person, stated that the Dangote Petroleum Refinery was constructed without any government incentives.
Speaking at the 2024 Crude Oil Refinery-owners Association of Nigeria (CORAN) summit in Lagos on Tuesday, Dangote said, “We built the Dangote refinery without a single incentive from the government.”
Represented by Mansur Ahmed, group executive director of Dangote Industries Ltd, Dangote also emphasized that Nigeria must stop using crude oil as collateral in order to secure the country’s future.
“To ensure sufficient feedstock availability, we will need to stop mortgaging crude. It is unfortunate that while countries like Norway are putting oil proceeds into a future fund, in Africa we are spending oil proceeds from the future,” Dangote remarked.
He further stressed the need for Nigeria to implement domestic crude supply obligations and expand oil production capacity to meet the rising demand from newly established refineries.
“The government of President Bola Ahmed Tinubu is taking active steps to achieve this through fast tracking IOC divestments and other initiatives,” he said.
On Nigeria’s path to becoming a net exporter of petroleum products and achieving energy self-sufficiency, Dangote explained that the country would require an additional 1.5 million barrels per day of refining capacity.
“This will not be an easy feat and strong government support will be required to achieve this,” he added.
Regarding Nigeria’s potential as a refining hub, Dangote noted that investors must be encouraged.
Dangote pointed out that Africa imports about 3 million barrels of petroleum products daily, despite producing over 3.4 million barrels of crude oil per day.
He estimated that the cost of these imports, mostly sourced from Europe, Russia, and other regions, reached approximately $17 billion in 2023.
“However, these markets will be more competitively served from Nigeria. Both the crude oil and the petroleum products will travel shorter distances,” Dangote said.
He explained that eliminating logistics costs for floating storage would allow countries to purchase petroleum products “just in time.”
“Nigeria and Africa can become completely self-sufficient and we can keep all the value on our shores. We have done it in Cement, and we can certainly do it for petroleum products,” he added.
He highlighted that the Dangote refinery already meets Nigeria’s demand for diesel and jet fuel, and it has recently begun petrol production, with plans to scale up output.
Dangote mentioned that the refinery has exported its refined products to various markets, including Europe, Brazil, the United Kingdom, the United States, Singapore, and South Korea.
Abdulrazaq Isa, chairman of Waltersmith Refinery and Petrochemicals Company Ltd, commended Dangote for the achievements and urged the government to support domestic refiners by ensuring crude availability, adhering to domestic crude supply obligations, and curbing smuggling through effective pricing and monitoring
Emmanuel Iheanacho, chairman of CORAN’s board of trustees and CEO of Integrated Oil and Gas, revealed that Nigeria loses approximately $83 billion annually due to its inability to meet the Organisation of Petroleum Exporting Countries (OPEC) quota.
Iheanacho added that transforming Nigeria into a net exporter would offer numerous benefits, but emphasized that increased investment is needed to boost oil production.
Although local refining is gaining momentum, Iheanacho acknowledged the continued importance of tank farms and encouraged the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to consider canceling import licenses, as Nigeria can now meet its domestic demand.
He also praised the Dangote refinery for setting a high standard with its production of Euro-V products, thereby protecting citizens from the dangers of high-sulfur fuels.
Huub Stokman, chairman of the Major Energies Marketers Association of Nigeria (MEMAN), remarked that Nigeria is on the verge of becoming Africa’s top refining powerhouse, which will greatly enhance the economy.
On the issue of crude supply, Momoh Oyarekhua, chairman of CORAN, expressed concerns and stated that local refiners would work closely with regulators and stakeholders to resolve these challenges.
Heineken Lopkobiri, minister of state for petroleum resources (oil), assured that the government remains committed to enhancing crude oil production and supporting domestic refineries through new policies and frameworks.