The launch of the Dangote Refinery presents an exciting opportunity to transform the energy and shipping markets in West Africa, and the facility stands to boost Nigeria’s role as an influential player in the global oil industry, fostering economic growth and regional development.
Nigeria’s standing in the global energy landscape is growing with domestic refining capacity expanding in 2025. The Dangote Refinery near Lagos presents a transformative opportunity for Nigeria’s economy and is expected to reshape global tanker routes and trade flows.
Nigeria has long been a leading exporter of crude oil, taking advantage of its abundant natural reserves. As the first sub-Saharan African country to join the Organisation of Petroleum Exporting Countries (OPEC) in 1971, Nigeria remains the most populous member of the group, with a population exceeding 222 million.
Today, the country is Africa’s largest oil producer and the 11th largest globally. According to the Nigerian Upstream Petroleum Regulatory Commission’s (NUPRC) 2023 annual report, as of January 2024, it had nearly 37 billion barrels of oil and condensate reserves.
Early in the year, NUPRC unveiled first half 2025 crude oil production forecast of producing oil companies and the refining requirement of functional refineries in Nigeria.
The move is pursuant to Section 109 of the Petroleum Industry Act (PIA), 2021 and it is aimed at effective capacity utilisation of the nation’s domestic refineries by ensuring a consistent supply of crude oil.
This comprehensive data provides insights into the projected crude oil needs for the refineries, crucial for understanding the energy landscape in Nigeria for the first half of 2025.
The forecasted daily crude requirement for refineries which is 770,500 bpd, is about 37 per cent of the forecasted first half 2025 average daily production of 2,066,940 bpd. However, it will be recalled that in October 2024, NUPRC launched Project 1 million Barrels which is expected to favourably impact the national production. NUPRC is leveraging the capacity of upstream operators to meet the target daily production of 2,500,000 bpd in the short term.
This strategic initiative aligns with Nigeria’s commitment to bolstering its domestic refining capacity and ensuring the sustainability of its oil industry. The first half of 2025 is expected to witness increased synergy between local refineries and producing companies, setting the stage for a more robust and self-reliant petroleum landscape in Nigeria.
Despite, the highlights detailing anticipated functionality of local refineries through sustained crude oil supply, a weak supply link is evident from concerns raised by Dangote refinery.
Nigeria, the refinery’s management said must enhance its crude oil production capacity and effectively manage its crude supply to ensure adequate feedstock for domestic refineries, in order to transit from a net importer to a net exporter of petroleum products.
Chairman of Dangote Refinery and Petrochemicals Company Limited, Aliko Dangote, made this assertion during his keynote address at a summit held in Lagos by the Crude Oil Refinery Owners Association of Nigeria (CORAN).
The event attracted top government officials and key stakeholders from the midstream and downstream sectors.
Addressing Nigeria’s potential as a refining hub, Dangote expressed concern that, despite producing over 3.4 million barrels of crude oil per day, Africa imports around 3 million barrels of petroleum products daily. He noted that these imports, primarily from Europe, Russia, and other regions, are estimated to cost approximately $17 billion in 2023.
He urged that Nigeria could capitalise on this situation to become a net exporter of refined petroleum products, as the markets would be more competitively served from Nigeria.
“Both the crude oil and the petroleum products will travel shorter distances. The logistics costs of floating storage will be eliminated, and countries can purchase their petroleum product requirements just-in-time. Nigeria and Africa can become completely self-sufficient, and we can keep all the value on our shores. We have done it in cement, and we can certainly do it for petroleum products.
“It is worth noting that the Dangote Refinery already produces sufficient diesel and jet fuel to meet Nigeria’s demand. We recently started the production of PMS and will soon ramp up to meet Nigeria’s needs. Our refined products have been exported to diverse markets, including Europe, Brazil, the UK, the USA, Singapore, and South Korea,” he added.
Represented by Engr. Mansur Ahmed, Group Executive Director of Dangote Industries Ltd, Dangote emphasised that Nigeria must develop a refining capacity of 1.5 million barrels per day and prioritise domestic crude supply obligations to seize this opportunity. Acknowledging the arising and future challenges, he urged the government to incentivise investors, contrasting this with the Dangote Oil Refinery, which was built without any government incentives.
It is unfortunate that while countries like Norway are putting oil proceeds into a future fund, in Africa, we are spending oil proceeds from the future. We will also need to prioritise the implementation of domestic crude supply obligations. We will need to expand our crude oil production capacity to support demand from new refining capacity. The government of President Bola Ahmed Tinubu is taking active steps to achieve this through fast-tracking IOC divestments and other initiatives,” he stated.
Emphasising that global developments in the petroleum sector, particularly in Europe, will disrupt historical trade flows for refined petroleum products in Africa, Dangote stated that Nigeria is uniquely positioned to capitalise on this opportunity and become a significant player in the global oil industry. He called for consultation, collaboration, and cooperation among stakeholders.
“As a vibrant exporter of refined products, Nigeria will witness an improvement in its balance of trade and generate much-needed foreign currency. Nigeria’s potential as a refining hub is clearly not in doubt; let us work together to make it happen,” he urged.
He noted that the summit’s theme, “Making Nigeria a Net Exporter of Petroleum Products,” would have seemed unrealistic a few years ago, and added that despite being Africa’s largest crude oil producer, Nigeria has historically relied on imports to meet its refined petroleum product needs.
However, he emphasised that the Dangote Petroleum Refinery and Petrochemic-als is poised to transform Nigeria from a “net importer” to a “net exporter” of refined petroleum products, establishing the country as an emerging player in global downstream trade flows; with refined products already exported to various markets, including Europe, Brazil, the UK, the USA, Singapore, and South Korea.
Commending Dangote for this transformation, Chairman of IPPG/Waltersmith Refinery & Petrochemicals Co. Ltd, Abdulrazaq Isa, called on the government to support domestic refiners by ensuring the availability of crude, adhering to domestic crude supply obligations, and implementing effective pricing and monitoring measures to prevent smuggling.
Chairman of CORAN’s Board of Trustees and CEO of Integrated Oil & Gas, Captain Emmanuel Iheanacho (rtd), remarked that the Dangote Oil Refinery has set a high standard by producing Euro-V products, thus protecting citizens from exposure to high-sulphur products. He noted that transforming Nigeria into a net exporter will bring numerous benefits but reiterated the need for increased investment to boost crude production, lamenting that Nigeria loses approximately $83 billion annually by not meeting its OPEC quota.
While acknowledging that tank farms remain essential despite local refining, Iheanacho urged the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), to consider cancelling import licences, as Nigeria can now meet its local demand.
Chairman of Major Energies Marketers Association of Nigeria (MEMAN), Huub Stokman, stated that Nigeria is on the verge of becoming Africa’s refining powerhouse, which will significantly boost the economy. The Chairman of CORAN, Momoh Oyarekhua, also expressed concern over challenges related to crude supply and stated that domestic refiners will work with regulators and stakeholders to address these issues.
The minister of state for petroleum resources (Oil), Senator Heineken Lopkobiri, on his part assured that the government would continue to refine frameworks to enhance crude production and support domestic refineries.
Unfortunately, the Society of Energy Editors in its second quarter outlook for Nigeria Energy Sector shows that Nigeria’s crude oil output remains below its OPEC quota (estimated at ~1.5 million barrels per day (bpd) in Q1 2025), with efforts to ramp up production hindered by insecurity, aging infrastructure, and divestments by IOCs.
The Society argues that though government aims to boost output to ~1.8 million bpd by mid-2025, but this will depend on improved security in the Niger Delta, finalising divestment deals with indigenous firms.
The group warns that the declaration of a state of emergency in Rivers State and suspension of democratic governance could disrupt oil production due to increased pipeline vandalism and militant activity, logistical challenges for oil workers and supply chains and potential force majeure declarations by operators.
If unrest escalates, Nigeria risks losing 100,000–200,000 bpd in Q2 2025, further straining revenue.
In a further analysis to that experts notes that though Nigeria had started to increase its oil and gas production under President Bola Tinubu, a series of blasts and fires at major pipelines are threatening to unravel the progress the country has made.
A political feud and crisis reminded the oil market that pipeline sabotage and politically-motivated vandalism in Nigeria’s oil-rich states is always lurking around the corner.
In the Rivers State in the Niger Delta, where a large part of the country’s oil is produced and exported, at least three explosions and fires at oil and gas pipelines halted some supply over the past week.
Early last week, the Trans-Niger Pipeline, one of Nigeria’s biggest pipelines carrying crude from the Niger Delta to the Bonny terminal, was rocked by a powerful explosion. The explosion at Bodo, Gokana Local Government Area of Rivers State, caused a massive fire at the section of the pipeline in the area.
Operations at the Trans-Niger Pipeline, which accounts for about 15 per cent of Nigerian oil exports, were restored a week later. But the violence and political crisis don’t end.
While the cause of the explosion has yet to be investigated and announced, there is already speculation that the blast could be the result of sabotage, in view of the threats that militant groups in the area have recently made. The militants have threatened to attack oil infrastructure in the Rivers state amid an ongoing political crisis between the state and the federal government over federal money allocation to Rivers.
As renewed political infighting puts Nigeria’s oil revival at risk, the president’s goal of lifting production to 2 million barrels per day (bpd) is under threat again.
Positioning Facility To Close Refining Gap
Despite above concerns and uncertainty in crude supply chain, Dangote is confident that it could continue to source for crude oil outside Nigeria.
The company wants to change the narrative as Nigeria has historically relied on imported refined products due to insufficient domestic refining capacity.
The $20 billion Dangote Refinery, more than a decade in the making, is now poised to change that.
Since operations began in January 2024, the refinery has turned Nigeria into a net exporter of jet fuel, naphtha, and fuel oil. Projections indicate that the country could export 50,000 bpd more gasoil than it imports this year, with exports expected to triple by 2026. When fully operational, the refinery will have a capacity of 650,000 bpd, significantly reducing Nigeria’s reliance on imported refined products.
Since operations at the new refinery began, GAC has seen the number of tankers it serves rise by about 21 per cent.
Support for vessels calling to offload crude oil or load up refined products includes updating owners, charterers, brokers and operators on the latest port operational information including potential delays and turn-around times, enabling them to make informed, balanced voyage calculations.
For decades, GAC has supported tankers calling at Nigerian ports and terminals with its portfolio of integrated ship agency, husbandry and logistics services. That includes a newly-opened state-of-the-art Inland Container Depot in Lagos where containers can be stripped or stuffed and last mile delivery arranged to any vessel in Nigerian waters.
GAC is the only agency in the country with its own seafarer recruitment service. At any given time, it has 250-300 crew onboard and can draw from a pool of 600 seafarers of all ranks up to Captains and Chief Engineers.
Environmental concerns remain a critical focus. According to Financial Nigeria, the Dangote Group has undergone rigorous environmental approval processes with the Ministry of Environment.
The refinery also complies with emissions standards set by the World Bank and the European Union. In 2017, it acquired advanced equipment from Elessent Clean Technologies (formerly DuPont Clean Technologies) to minimise its environmental impact.
Reducing the nation’s reliance on fuel imports from Europe and America will decrease the greenhouse gas emissions associated with maritime transportation, aligning the project with global sustainability goals.
Johan Thuresson, GAC Nigeria’s Managing Director, says: “Before Dangote, Nigeria heavily relied on imported refined products. Now, the country is positioned to become a major exporter of clean petroleum and fuel oil. This shift will enhance Nigeria’s role in the global tanker market and stimulate growth in West Africa’s logistics and transportation industries.”
Increased refining capacity is expected to alter trade dynamics in the region as neighbouring countries adjust their import strategies in response to Nigeria’s growing exports. This change will create new trade routes and reshape tanker deployment across the region.
The Nigerian National Petroleum Company Limited (NNPCL) was expected to supply half of the Dangote Refinery’s crude oil requirements initially. However, it only delivered about one-third of the anticipated volumes in the first half of 2024. Consequently, Dangote has begun sourcing additional crude supplies from international markets, particularly the United States.
“When the refinery was first envisioned, the aim was to use domestic crude oil for energy security,” says Thuresson. “However, economic realities have shifted. With U.S. crude currently priced lower than Nigerian crude, the country is now exporting its high-quality crude while refining more cost-effective imports.”
This transformation is expected to increase tanker traffic, significantly boosting Nigeria’s shipping and logistics sectors.
The refinery is currently estimated to be running at 45 per cent of its capacity, at most. Looking ahead, a short-term pick-up in crude imports of crude oil is on the cards. It is harder to predict however what will happen longer term, though some scenarios suggest there may eventually be a pipeline suppling the crude oil direct to the refinery. At this stage, it is difficult to foresee how much of the products Dangote refines will be exported and how much will feed domestic demand.
The country’s tanker market is expected to evolve as the refinery reaches full capacity. A decline in crude oil exports may reduce demand for VLCCs and Suezmax vessels, but an increase in refined product exports would probably drive-up demand for medium-range and long-range tankers, facilitating new trade routes to Europe, South America, and Africa.
Changes in oil flows will heighten competition for shipping services in Nigeria and throughout West Africa,” Thuresson notes, highlighting the region’s growing importance in the global energy trade. “Through its network of office and agents throughout the region, GAC can help support tanker operators in emerging oil countries that are not currently large exporters today but have the potential to grow.”
Despite a promising outlook, Nigeria’s oil and tanker markets are facing significant infrastructure-related challenges.
Ageing pipelines, jetties, and storage facilities have already impacted both crude and refined product exports. In 2024, maintenance delays resulted in a substantial decrease in production capacity, raising concerns about the stability of future exports.
“While refining operations are expected to stabilise and attract further foreign investment, ongoing upgrades to infrastructure will be essential for ensuring long-term success,” says Thuresson.
To fully capitalize on the advantages offered by the Dangote Refinery, Nigeria must prioritise modernising its oil transportation and storage systems. Improved infrastructure will be crucial in maintaining competitive export capabilities and solidifying the country’s position as a key player in global energy markets.
As stakeholders assess the long-term effects of the Dangote Refinery, the transition from crude oil exports to refined product trade is already transforming West Africa’s energy landscape.
With a growing demand for product tankers and new trade flows emerging, Nigeria is well-positioned to enhance its role in the global energy market, driving economic growth and industry transformation for years to come.
