The Dangote Refinery, Nigeria’s $20 billion investment in energy infrastructure, has entered a new phase of operations by securing a critical agreement with oil marketers to supply a minimum of 28 million liters of petrol daily for the next six months.
The deal, struck during a weekend stakeholders’ meeting in Abuja, is aimed at ensuring consistent supply for domestic consumption while addressing long-standing challenges in the petroleum sector.
This agreement, confirmed by the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), signals a shift in Nigeria’s fuel supply dynamics. PETROAN, alongside key stakeholders such as the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the Nigerian National Petroleum Company Limited (NNPC), and independent refiners like Waltersmith, Edo, and Aradel refineries, agreed to prioritize sourcing petroleum products from Dangote Refinery.
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The resolution requires oil marketers to cease importing products unless Dangote Refinery is unable to meet demand.
Dr. Joseph Obele, PETROAN’s spokesperson, described the agreement as a major step toward stabilizing Nigeria’s downstream sector. He emphasized its potential to address price fluctuations, ensure steady supply, and foster stakeholder collaboration.
PETROAN’s National President, Dr. Billy Gillis-Harry, expressed optimism about the deal’s impact, saying, “The resolution will bring succour to the downstream sector and improve the Nigerian economy.”
As part of this agreement, Dangote Refinery also announced a reduction in the ex-depot petrol price from N990 per liter to N970 per liter. This price adjustment, according to the refinery’s Group Chief Branding and Communications Officer, Anthony Chiejina, was made to express gratitude to Nigerians for their support.
“As the year comes to an end, this is our way of appreciating the good people of Nigeria for their unwavering support in making the refinery a dream come true. In addition, this is to thank the government for their support as this will complement the measures put in place to encourage domestic enterprise for our collective wellbeing,” he said.
He added that the refinery remains committed to delivering high-quality, environmentally sustainable products to meet domestic needs and alleviate fears of supply shortages.
“While the refinery would not compromise on the quality of its petroleum products, we assure you of the best quality products that are environmentally friendly and sustainable.
“We are determined to keep ramping up production to meet and surpass our domestic fuel consumption, thus dispelling any fear of a shortfall in supply,” he said.
The resolution includes additional provisions for aviation fuel and diesel supplies from domestic refineries. According to the agreement, the NMDPRA will assess domestic production capacities to determine any necessary importation volumes, ensuring shortfalls are covered.
Furthermore, oil marketing companies will negotiate directly with refiners on a “willing buyer, willing seller” basis to streamline supply and pricing mechanisms.
This follows the report of an earlier agreement that will see the refinery supply 60 million liters of fuel each week to IPMAN.
While this development has been largely welcomed, it comes after significant skepticism from industry players about Dangote Refinery’s capacity to reliably supply Nigeria’s vast fuel market. Concerns were previously raised about its prices, production scale, and logistical readiness to meet fluctuating domestic demand. These doubts now appear to be fading, with stakeholders expressing confidence in the refinery’s operational capabilities.
Beyond domestic supply, the Dangote Refinery is also ramping up its international footprint. A report by S&P Global Commodity Insights revealed that the refinery has successfully exported jet fuel to various international destinations, including South Korea, Iceland, Tenerife, and Heathrow Airport in London.
From January to October 2024, the facility delivered substantial volumes of products to West African nations such as Ghana and to the transshipment hub in Lome, Togo. South Korea emerged as the largest single export destination, receiving 23,000 barrels per day (bpd) of naphtha. The report predicts that by 2026, Nigeria could triple its gasoil exports, positioning itself as a significant player in the global fuel market.
S&P Global noted, “For the first time in history, Nigerian-made jet fuel has found its way to airports ranging from Iceland to Tenerife and London’s Heathrow.”
The report highlighted that as Dangote Refinery reaches full operational capacity, at least eight African countries are preparing to import its products, marking Nigeria’s transformation into a net exporter of refined petroleum products.
The refinery’s enhanced production capacity and export activities are seen as pivotal in reshaping Nigeria’s energy industry. This transition is expected to stabilize prices and strengthen the economy, though stakeholders emphasize the need for continued investment in infrastructure and logistical systems to support these goals.
The agreement to prioritize Dangote Refinery’s products and the facility’s increasing export volumes is seen as a turning point in Nigeria’s energy sector. Economists believe that with sustained collaboration among key players and strategic policy implementation, the country stands to achieve greater self-sufficiency in petroleum product supply, alongside economic growth and global competitiveness.