The largest oil refinery in Africa, Dangote Refinery, has been officially launched in Nigeria with the hopes that the energy-rich nation would become self-sufficient in energy and a net exporter of refined petroleum products.
The $19 billion Dangote refinery, which is one of the largest oil refineries in the world, has a daily capacity of 650,000 barrels and is located in Lagos, Nigeria’s economic nerve centre.
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Why is the Dangote refinery significant to Nigeria’s economy
It has been dubbed a “game-changer” for Nigeria’s oil and gas industry, which has been suffering for years, by some experts, while other analysts claim that oil theft may be limiting its potential. The majority of Nigeria’s state-owned refineries are undermaintained and operate at far lower capacity. Despite being Africa’s largest oil producer, the West African country must import refined petroleum products for its own needs.
According to the owner, Aliko Dangote, the brand-new oil refinery will enable us to meet not only our country’s demand but also to become a key player in Africa’s and the global market.
Dangote, who is Africa’s richest man, explained that the refinery will begin running by the end of July. He said the plant would work alongside a fertiliser factory and be fueled by a 435 megawatt power plant. At least 40% of the oil products produced there might be exported when operating at full capacity, providing Nigeria with considerable foreign currency revenues.
“Our first call is to ramp up production to ensure that this year we are able to fully satisfy our nation’s demand for higher-quality products to enable us to eliminate the tragedy of import dependency and stop once and for all the dumping in our market of toxic, substandard petrol products,” Dangote said.
Authorities believe the refinery might increase gasoline supply across Africa in addition to producing tens of thousands of jobs at a time when several of the continent’s refineries are running far below capacity.
At the inaugural event, Muhammadu spoke to a number of African leaders. He said the initiative demonstrated the value of working with the private sector to accelerate economic growth across the continent.
As Nigeria fights against widespread oil theft, which has recently led crude output to fall to a multidecade low, some experts worry that the refinery’s capacity may be constrained. This may have an impact on government revenues and the ability to carry out crucial projects.
Olufola Wusu, an oil and gas specialist who was a member of the committee that reviewed Nigeria’s gas policy, said that “the Dangote refinery is not a silver bullet for all the problems in the energy sector in Nigeria.”
But he said it was a fantastic beginning for restoring the industry.
Wusu explained that it would effectively provide a new industry different from an import-dependent one and solve the problem of creating a domestic capacity for refined products. He noted that the refinery also would be looking to buy oil from outside the country if Nigeria’s limited crude production persists. It is unclear what agreement is in place with Nigeria’s major oil companies.
According to him, “It will solve the problem of creating a domestic capacity for refined products and basically going to provide a new industry different from an import-dependent one. It is not clear what agreement is in place with Nigeria’s major oil companies, but the refinery also will be looking to buy oil from outside the country if Nigeria’s limited crude production persists.”
The decision made on Monday represents “a defining moment for the energy sector in Nigeria, for the region, and on the international sector,” according to Mele Kyari, the chairman of Nigeria’s national oil corporation.