Dangote Refinery Constructs Eight 6.29mb Additional Tanks As it Prepares to Import More Crude Oil

The Dangote Petroleum Refinery, Africa’s largest and most ambitious oil refining project, is ramping up its crude storage capacity with the construction of eight additional tanks capable of holding 6.29 million barrels (approximately 1 billion liters) of oil, according to The African Report.

This move, which increases its storage capacity by 41.67% to a total of 3.4 billion liters, is believed to be a clear signal that the refinery is redirecting its focus toward securing crude oil supplies from international markets rather than relying on domestic sources.

The decision to expand crude oil storage for imported supplies marks a significant shift in strategy. Refinery officials have openly acknowledged their growing reliance on international crude markets to sustain operations.

Devakumar Edwin, Vice President in charge of the oil and gas business at Dangote Industries, admitted the challenges posed by the unreliable domestic supply chain.

“Importing crude from other countries instead of buying locally means that our crude stockpiles will have to be higher. So we have started building eight additional crude tanks to hold a billion liters, over and above our original storage capacity. Four of them are nearing completion,” Edwin stated.

This shift signals that the refinery may have lost confidence in the ability of the Nigerian National Petroleum Company Limited (NNPCL) to meet its supply commitments. Despite having access to Nigeria’s abundant crude reserves, the refinery is increasingly looking beyond the country’s borders to secure the feedstock it needs.

The oil supply challenge has severely impacted the refinery’s operations since its inauguration in 2024.

When the $20 billion Dangote Refinery was first conceived, it was heralded as a transformative solution to Nigeria’s longstanding reliance on imported petroleum products. The expectation was that the refinery, with its capacity to process 650,000 barrels of crude oil per day, would primarily rely on domestic crude, given Nigeria’s status as Africa’s largest oil producer.

To make this expectation come true, the NNPCL went into an agreement with the refinery for the supply of crude oil as part of its 20% stake. However, the state-owned oil company failed to fulfill its part of the deal, resulting in the reduction of its stake to 7.2%.

This backdrop from the NNPCL has been attributed to systemic issues such as pipeline vandalism, frequent attacks on crude transportation infrastructure, and oil theft, which has drained significant volumes of oil from production channels. Decades of underinvestment have compounded these challenges, leading to aging infrastructure and declining output.

Furthermore, oil supplies from the NNPCL are tied to loans and other financial commitments, significantly scuttling what is available for domestic supply. These factors have caused a chronic inability to deliver the consistent and high-quality crude supply that the Dangote Refinery requires.

Edwin’s remarks highlight the gravity of the situation, as he noted that crude oil supply from the NNPC to the refinery remains very low.

However, the refinery’s strategic shift toward international crude imports has profound implications. Energy experts have warned that sourcing crude from global markets, which negates the naira-for-crude oil deal struck last year, introduces higher procurement and transportation costs, potentially driving up the price of refined products. They note that it also reflects missed economic opportunities, as the inability to fully utilize domestic crude undermines the refinery’s potential to boost local value addition and generate employment.

While Dangote Refinery’s decision to expand its storage capacity for imported crude underscores its pragmatic approach to navigating Nigeria’s unpredictable oil sector, it also highlights the deeper systemic failures that continue to plague the industry. The refinery’s reliance on international crude markets is seen as a symbol of unfulfilled promises in Africa’s largest oil-producing nation.

Experts believe that for the refinery to fully realize its transformative potential, Nigeria must confront and resolve the challenges undermining its domestic oil supply chain.