The Nigerian National Petroleum Company (NNPC) Limited is expected to supply the new 650,000 barrels-per-day Dangote oil refinery in Lagos with up to six cargoes of crude oil by December.
According to Reuters, quoting industry sources with knowledge of the matter, this will be used in test runs in the refinery situated in Lekki free trade zone. Once it is fully up and running, the Dangote refinery will turn oil-rich Nigeria into a net exporter of fuels, especially as the country is currently almost totally reliant on imports.
Due to its power challenges, Nigerians rely heavily on fuel (petrol) for their energy needs. Analysts are of the opinion that with an increase in its refined capacity over time, fuel prices will reduce significantly, especially with the fuel subsidy removal that has also increased the cost of living in Africa’s largest economy.
Reuters further reported that one of the sources, an NNPC official, who declined to be named, specified six cargoes, or 200,000 bpd, would be supplied in December as part of a one-year deal, adding that volumes in future months would be supplied “based on mutual agreement and availability”.
The other sources said about 4-5 cargoes, or at least 130,000 bpd, were planned. A Dangote Group official, who did not wish to be named, said “Some of the agreements have confidentiality clauses” without elaborating when asked about the NNPC supply deal.
NNPC Ltd has a 20% stake in the 650,000 bpd refinery, which was inaugurated in May by Nigeria’s immediate past president Muhammadu Buhari at a reported cost of $19 billion.