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Nigeria’s Dangote refinery, one of the largest in the world, has edged closer to production after it received its first batch of crude from Shell’s oil trading arm.
It marks a key moment for the $20bn refinery, funded by Africa’s richest man Aliko Dangote, after years of delays and budget overruns.
The delivery from Shell’s trading arm of 1mn barrels from one of Nigeria’s offshore fields represents the first tranche of 6mn barrels of crude due to be supplied to the facility from a range of suppliers, the Dangote Group said in a statement on Friday.
The crude will enable the refinery to process an initial 350,000 barrels of crude oil a day into petroleum products, including petrol, diesel and low-sulphur fuels.
Nigeria is Africa’s largest oil producer but has had to import fuels due to a lack of refining capacity. At full capacity, the refinery will process 650,000 b/d, which could change the country into a net exporter of refined fuels.
Dangote, president and chief executive of the Dangote Group, described the deal as a “significant milestone” and an “important achievement”.
“Our focus over the coming months is to ramp up the refinery to its full capacity. I look forward to the next significant milestone when we deliver the first batch of products to the Nigerian market,” he said.
The next four crude cargoes will be supplied by the state-owned oil company the Nigerian National Petroleum Corporation (NNPC) in “two to three weeks” and ExxonMobil will supply the last of the initial six cargoes at an unnamed date, the group said.
The fact the first cargo came from Shell and not from NNPC will enhance speculation that Dangote, Nigeria’s biggest industrialist, is yet to accomplish an agreement with the state oil company over crude supply.
NNPC owns a 20 per cent stake in the project, which it acquired in 2021 for $2.76bn, but is said to be bargaining for a bigger share. Dangote disputed the suggestion, telling the Financial Times last month: “I don’t think NNPC needs to buy more shares. I think they’re OK with what we’ve given them.”
The Dangote Group said Shell’s crude would be used for an initial evaluate of the facility’s capabilities before the processing of diesel, aviation fuel and liquefied petroleum gas and latterly premium motor spirit, starts.
Shell Nigeria country chair Osagie Okunbor welcomed the start-up of the refinery, adding that Shell was “happy to be enabling it”.
Dangote said last month that he expected the refinery to accomplish its maximum capacity at the end of next year, although the IMF has said it doubts it will accomplish more than a third of that target by 2025.
The company did not answer to queries about when the first batch of refined products is expected from the facility.
