At the West African Refined Fuel Conference in Abuja, Dr. Aliko Dangote, President/CEO of Dangote Petroleum Refinery, unveiled a troubling paradox in Nigeria’s oil ecosystem: despite being a major crude-producing nation, local refiners like his are forced to buy Nigerian crude oil from international middlemen—and at a premium.
In his words: “Rather than buying crude oil directly from Nigerian producers at competitive terms, we found ourselves having to negotiate with international trading companies, who were buying Nigerian crude and reselling it to us, with hefty premiums, of course”.
Dangote stated that despite producing around seven million barrels of crude oil per day, Africa refines only about 40 per cent of its 4.3 million barrels daily consumption of refined products domestically.
The event, organized by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and S&P Global Commodity Insights, attracted major stakeholders in the oil and gas sector.
According to the richest man in Africa, Nigeria and other African countries are increasingly becoming a destination for cheap, often toxic petroleum products, many of which are blended to substandard levels that would not be permitted in Europe or North America.
He disclosed that due to the continent’s limited domestic refining capacity, Africa imports over 120 million tonnes of refined petroleum products annually, at a cost of approximately $90 billion.
While appreciating the Management of the Nigerian National Petroleum Company Limited (NNPC) for making some cargoes of Nigerian crude available to the refinery from the start of production to date, he revealed that his company, monthly imports between nine and 10 million barrels of crude from the United States of America and other countries.
Dangote maintained that trade must be grounded in economic efficiency and comparative advantage and not at the expense of quality or safety standards.
Describing it as illogical and of no economic sense for Africa to be exporting raw crude only to re-import refined products which continent is more than capable of producing.
He reflected on the experience of delivering the world’s largest single-train refinery, highlighting a range of challenges faced, including technical, commercial, and contextual hurdles unique to the African landscape.
He stressed that
building the Dangote Petroleum Refinery is one of the most capital-intensive and logistically complex industrial facilities ever constructed.