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Nigeria, the continent’s leading crude oil producer, currently imports almost all of its fuel. But the rehabilitation of four public refineries and the commissioning of billionaire Aliko Dangote’s mega-project in Lagos could completely change the situation.
Published on: January 16, 2024 – 6:00 p.m
4 mins
Ow NigeriaIn recent weeks, six million barrels of crude oil have been delivered to the Port of Lekki to feed the first operation of the Dangote Group mega refinery. This is a significant step, more than six months later the official inauguration of this gigantic projectcost $20 billion – and its delivery was significantly delayed.
The company announced in a press release Dangote announced: “ the start of production » of diesel and heating oil for the aviation sector. But we still have to wait for fuel production to begin. “ Let’s say this is the first time they’ve put oil in the system and run raw product through the gears. The main thing is to test the devices individually to check whether they work. », confides a good expert on the Nigerian oil sector.
The specialists all talk about the technical complexity of commissioning the world’s largest catchment refinery, whose operation requires a significant and sustainable supply of crude oil. “ With this first shipment they won’t last longer than a few weeks. The only difference is that such machines consume a lot of energy and cost a fortune to operate.continues the same source in Lagos. If it is shut down again after the testing phase, it will be months before production resumes ».
The challenge of supply
The issue of crude oil supply is central to ensuring the continuity of refined product production. Nigeria’s state oil company NNPC, which has a 20% stake in the project, had committed to supplying about 300,000 barrels of crude oil per day, but this will not be enough to bring production to the maximum of 650,000 barrels per day. “ To achieve this production capacity, it is necessary to ensure that 20 to 30 loads of crude oil are delivered to Lekki on a very regular basis.emphasizes Charles Thiémélé, Africa director of the BGN. It is a technical challenge, especially since significant storage capacity is required for the uninterrupted operation of the refinery. ».
Ultimately, it is therefore likely that the Dangote refinery will have to source its supplies from outside Nigeria. “ There is always crude oil on the market as long as you can afford it » assures this trader who is also confident about the commercial possibilities for the refined oil that will leave the Lekki factory.
However, the fuel produced in Lagos is unlikely to be sold exclusively in the Nigerian market. As a trading company, Dangote Group should first go to the highest bidder. “ Even if it decides to sell in the sub-region, the impact of the project will undoubtedly be beneficial to the Naira [la monnaie nationale, dont la valeur n’a cessé de dégringoler ces derniers mois, NDLR] », however, notes the good expert on the Nigerian oil sector.
Renovation of public refineries
Beyond the private project of billionaire Aliko Dangote, Nigeria is also betting on the rehabilitation of its public refineries to ensure its gasoline supply in the coming years: 1.5 billion dollars were allocated in 2021 for the renovation of the Port Harcourt refinery built by the Italian Company Maire Tecnimont. After an initial test phase, it will soon be ready for operation. The smaller Kaduna and Warri refineries benefit from a “ quick solution », a quick repair with the aim of resuming production without major investments.
The NNPC has already indicated that it would entrust the management of the Port Harcourt Refinery to private operators to “ Ensuring energy security » you Nigeria. « The sustainability of these repairs will really depend on the level of investment allocated to maintaining these three refineriesemphasizes Mickael Vogel, research director at Hawilti in Lagos. Together they represent more than 400,000 barrels per day – enough to meet local needs. Its optimal functioning is therefore in Nigeria’s interest, even if it will take months ».
The issue is no less crucial. “ If Nigeria manages to renew its public refineries – which should happen by 2024-2025 – and the private Dangote factory produces as much as planned, the country will become the largest refiner in Africa, ahead of Algeria, ahead of Egypt, ahead of South Africathe analyst develops. In particular, this should allow Nigeria to conserve its dollar reserves and spend them elsewhere than on purchasing gasoline. With the prospect of stabilizing the finances of Africa’s largest economy again ».
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