…awaiting regulatory clearance to feed market
The $18.5 billion 650,000 barrels per day Dangote Petroleum Refinery in Lagos, Nigeria, has commenced production of diesel and aviation fuel as a first phase of its operations.
The refinery will then extend in phases to the production of petrol, kerosene and liquefied petroleum (cooking) gas, among others, with a surplus of each of these products for export.
“We have started the production of diesel and aviation fuel and the products will be in the market within this month (January) once we receive regulatory approvals,” said Aliko Dangote, President of the Dangote Group, in a statement, Friday evening.
Dangote further thanked Nigerians for believing in the project and President Tinubu for his advice and facilitation.
Days back, the Dangote Refinery received a sixth tranche of one million barrels of crude oil from the Nigerian National Petroleum Company Limited (NNPC Ltd), which the company had said would be the final trigger to enable the activation on of its plant.
Industry watchers anticipate the refinery will significantly change some local and global dynamics relating to the supply and sale of petroleum fuels, as well as industry efficiencies, pricing and priorities.
To this end, various industry groups have been engaging in frantic discussions concerning terms, conditions and timing for the supply of refined fuels from Dangote Refineries in the weeks leading up to the take-off of the project.
These include the Manufacturers Association of Nigeria (MAN) the Airline Operators of Nigeria (AON), as well as road transport business groups, among others.
Designed for 100% Nigerian crude with the flexibility to process other crudes, the Dangote Petroleum Refinery can process most African crude grades, as well as Middle Eastern Arab Light and even US Light tight oil, as well as crude from other countries.
It has the capacity to meet 100 per cent of Nigeria’s requirement of all refined petroleum products, including petrol, diesel, kerosene, jet fuel and liquefied petroleum (cooking) gas, with a surplus of each of these products for export.
Industry watchers say the Dangote Refinery will transform Nigeria from a mere producer of crude oil to a net exporter of refined fuels, earning foreign exchange and attracting spin-off businesses, including shipping, which will generate revenue and jobs in the local industry and earn taxes for Nigeria.
It will further enhance the efficiency of Nigerian industries by sustaining a steady supply of diesel fuel at competitive prices and is expected to make savings from the elimination of imports costs on refined products.
It is anticipated that the refinery will stabilise the supply and prices of refined products including petrol, diesel, kerosene, aviation fuel and liquefied natural (cooking) gas among others, but industry experts warn that price slashes from the facility would be unlikely, especially in the immediate.
Local airlines under the aegis of the Airlines Operators of Nigeria and local producers on the platform of the Manufacturers Association of Nigeria have begun plans aimed at getting Dangote Petrochemical Refinery to priotise diesel and JetA1 supplies to local carriers and manufacturers.
Prof. Obiorah Okonkwo, Chairman of United Nigeria Airlines and spokesperson for AON is reported to have said that local carriers had begun talks with the management of the refinery, expressing hope that the talks would be fruitful.
“We are talking with him and hope that it will be fruitful,” Okonkwo reportedly said while responding to an enquiry on whether local airlines had plans to begin talks on aviation fuel supply with the Dangote Refinery.
The Manufacturers Association of Nigeria (MAN) likewise said its members were meeting with the aim of coming up with a position for possible presentation to the Dangote Refinery management.
MAN President, Francis Meshioye, reportedly said the association was meeting to determine whether an arrangement would be made with Dangote Refinery on the supply of diesel to its members.
Chris Aligbe, Chief Executive Officer, Belujane Konzult, and former spokesman for the defunct Nigerian Airways, said aviation fuel was the highest single cost factor in airline operations and as such was a critical consideration.
Aligbe said, “Fuel is the highest single cost factor in airline operation, so, when we have such things skyrocketing, the airlines will be in a very terrible situation.
“They will take a beating and transfer the cost to the passengers, otherwise, they won’t survive. No one expects the local airlines to bear that burden without passing it on to their passengers. That’s the situation we find ourselves in.”
Aviation watchers say that once the Dangote Refinery establishes and sustains the production and supply of aviation fuel, international airlines would be encouraged to make stop overs in Nigeria to lift fuel, in addition to the passenger consideration component.
