The Organisation of the Petroleum Exporting Countries (OPEC) has expressed confidence that the Dangote Petroleum Refinery, located in Lekki, Nigeria, will play a significant role in reducing petrol prices in the country. The refinery, which is still in its ramp-up phase, has requested the Nigerian government to ensure a consistent and sufficient supply of crude oil, as part of the naira-for-crude deal, to meet its production targets.
Officials from the $20 billion refinery emphasized that OPEC’s projections regarding the refinery’s potential to stabilize Nigeria’s petroleum market are based on thorough research. The refinery has already had a positive impact on the nation’s fuel prices, notably reducing diesel prices from around N1,700 to N1,000 per liter and lowering the price of Premium Motor Spirit (PMS) from N950 to N890 per liter. It has also contributed to eliminating fuel scarcity, particularly during the festive season.
OPEC and the Crude Oil Refinery Owners Association of Nigeria (CORAN) have expressed optimism that the Dangote Refinery, along with other refineries, can contribute to providing Nigerians with more affordable fuel. At a production capacity of 650,000 barrels per day, the Dangote refinery is the largest single-train refinery globally. Dangote Group President, Alhaji Aliko Dangote, has repeatedly stated that the refinery would eliminate the need for fuel imports, thereby ending Nigeria’s reliance on imported refined petroleum products.
In its February Monthly Oil Market Report, OPEC highlighted that the Dangote refinery, once at full production, could help stabilize the supply of petroleum products in the country. The refinery is currently ramping up its operations and is expected to reach its full capacity by March 2025, according to Dangote Group Vice President, Davakumar Edwin.
Despite this progress, the refinery faces a major challenge due to limited local crude oil supplies. Nigeria’s refining capacity is growing, but the current allocation of 450,000 barrels per day for local refineries is insufficient. A recent report by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) revealed that Dangote, the Port Harcourt, and other refineries will need 770,500 barrels of crude oil daily for their operations.
To meet this demand, the Dangote refinery has been importing crude oil, with 12 million barrels recently sourced from the United States. The refinery is also constructing eight new storage tanks to accommodate imported crude, increasing its storage capacity by 41.67%. This move reflects the ongoing unreliability of local crude supplies, which has forced the refinery to depend more on imports.
While the Federal Government has made strides with the naira-for-crude deal, local sources argue that the deal’s execution has been less than optimal, with supply falling short of the refinery’s needs. The Dangote refinery has called on the government to ensure that the deal fulfills its objectives for the good of the Nigerian populace.
OPEC’s report noted that Nigeria’s oil sector remains a crucial pillar of the nation’s economy, despite the increasing role of the non-oil sector in driving growth. Economic growth reached 3.5% year-on-year in Q3 2024, with OPEC projecting continued stability in the country’s economic growth through Q4 2024.
For Nigeria to meet its OPEC oil production quotas and fully support local refineries, increased crude oil production is essential. In January 2025, Nigeria achieved 103% of its OPEC production quota, producing 1.54 million barrels per day. However, experts caution that Nigeria must address the challenges of crude oil theft and pipeline vandalism to fully meet the domestic needs of its refineries.
As the Dangote Refinery continues its efforts to ramp up production and stabilize Nigeria’s fuel supply, the hope is that it will play a key role in reducing petrol prices, eliminating fuel scarcity, and advancing the nation’s energy independence.