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Aliko Dangote, the head of Dangote Group, has urged Nigeria to cease relying on foreign crude oil to supply its domestic refineries. He believes the country should prioritize self-sufficiency in order to ensure a steady supply of feedstock for its manufacturing industries.
Speaking at a summit organized by the Crude Oil Refinery Owners Association of Nigeria in Lagos, Aliko Dangote criticized Nigeria and other African countries for spending their oil revenues rather than investing them in a future fund, like Norway. He contrasted this approach with Norway’s practice of saving oil proceeds for future generations.
“To ensure sufficient feedstock availability we will need to stop mortgaging crude. It is unfortunate that while countries like Norway are putting oil proceeds into a future fund through their national wealth funds, in Africa, we are spending oil proceeds from the future today,” he stated.
The Nigerian National Petroleum Company Limited has pledged 272,500 barrels of crude oil per day as collateral for loans totaling $8.86 billion, according to the Eastern Update. These agreements, known as crude-for-loan deals, are designed to secure financing for the company.
According to the report, the Nigerian National Petroleum Company Limited’s pledge to provide 272,500 barrels of crude oil per day for loan deals translates to approximately 8.17 million barrels of crude oil being used for this purpose each month.
The analysis of a report by the Nigeria Extractive Industries Transparency Initiative and the NNPC’s financial statements revealed that the Nigerian National Petroleum Company Limited’s pledge to provide 272,500 barrels of crude oil per day for loan deals would result in the consumption of approximately 8.17 million barrels of crude oil each month.
Mansur Ahmed, representing Aliko Dangote at an event on Tuesday, stressed the need for Nigeria to accelerate the implementation of domestic crude production. He emphasized the importance of this initiative for the country’s economic growth.
“We will also need to prioritise the implementation of the domestic crude supply obligation. We will need to expand crude production capacity to support demand from the refinery,” he submitted.
At the event on Tuesday, Dangote Group’s Group Executive Director, Mansur Ahmed, announced that the company had constructed the 650,000-barrel-per-day capacity Dangote refinery in Lagos without receiving any government support.
Read also: I Built Dangote Refinery Without Support From FG – Aliko
“We built the Dangote refinery without a single incentive from the government. However, to achieve the vision of turning Nigeria into a refining hub for the region, investors need to be incentivised,” he stated.
Dangote maintained that 1.8 million barrels of new refining capacity is coming on stream in the next three years in Kuwait, China, and Bahrain.
On the other hand, he said Europe is tightening environmental standards while Holland and Belgium have banned exports of low-quality petroleum products from their hubs, stressing that these low-quality products used to be destined for Africa.
Quoting a report, Dangote mentioned that several refineries across Europe and China, with a total capacity of 3.6 million barrels per day are likely to be shut down over the next couple of years.
He said, “It was recently in the news that Scotland’s only refinery will be shut down next year. Shell is converting the 7.5 million tonnes per annum refinery in Germany to a lubricating plant.
“So, the opportunities are there. Africa imports about 3 million barrels per day of petroleum products. About half of this volume is imported by countries along the coast from Senegal to South Africa.
“These same countries produce over 3.4 million barrels of crude per day, which indeed highlights the problem of the dimension of excess crude production capacity without refining capacity. The imports come from Europe, Russia, and other parts of the world.
“So to grab this opportunity, we will need to build 1.5 million barrels per day of additional refining capacity. This would not be an easy feat, and strong support from the government and cooperation between stakeholders would be essential.”
This came as the Federal Government announced that it has officially designated the Dangote refinery as the exclusive supplier of jet fuel or Jet A1 for Nigerian airline operators.
This was disclosed by the Minister of Aviation, Festus Keyamo, during an interview with Channels TV on Tuesday.
“The airline operators just met recently. With my blessing, it’s a decision from the airline operators in Nigeria that they should only buy from Dangote refinery Jet A1,” Keyamo said.
