Kehinde Fajobi
Aliko Dangote, President of Dangote Group, has called on the Nigerian government to stop mortgaging crude oil in exchange for loans and instead ensure a steady supply of feedstock for local refineries.
Speaking at a summit hosted by the Crude Oil Refinery Owners Association of Nigeria in Lagos, Dangote expressed concern over the country’s reliance on future oil earnings.
“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,” Dangote said.
His comments followed reports that the Nigerian National Petroleum Company Limited (NNPC) had committed 272,500 barrels per day of crude oil through various crude-for-loan deals totaling $8.86 billion.
The report noted that this daily pledge amounts to about 8.17 million barrels per month being used for loan repayments.
Represented by Mansur Ahmed, Group Executive Director, Dangote also urged the government to prioritize the domestic crude supply obligation to meet local refinery demands.
“We will need to expand crude production capacity to support demand from the refinery,” he stated.
Dangote further disclosed that the 650,000 barrels-per-day capacity Dangote Refinery in Lagos was built without any government incentives, stressing the need for government support to attract more investors.
“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 incentivized,” he explained.
Dangote highlighted the global shifts in refining, noting that 1.8 million barrels of new refining capacity would come online in Kuwait, China, and Bahrain over the next three years.
Meanwhile, Europe is tightening environmental standards, with countries like Holland and Belgium banning exports of low-quality petroleum products, which were previously shipped to Africa.
Citing industry reports, Dangote added that several refineries across Europe and China, with a combined capacity of 3.6 million barrels per day, are expected to shut down soon.
“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,” he noted.
He emphasized that Africa’s refining gap presents significant opportunities, as the continent imports roughly 3 million barrels per day of petroleum products while producing over 3.4 million barrels of crude per day.
“To seize this opportunity, we will need to build 1.5 million barrels per day of additional refining capacity. This will not be easy and will require strong government support and cooperation among stakeholders,” Dangote stressed.
Meanwhile, the Federal Government has officially designated the Dangote Refinery as the exclusive supplier of jet fuel (Jet A1) for Nigerian airline operators. Minister of Aviation Festus Keyamo announced the decision in 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 Jet A1 from Dangote refinery,” Keyamo said.
He added that sourcing jet fuel from Dangote would shield local airlines from the volatility of international oil prices, helping to reduce their operational costs.
“You can see that yesterday we started the naira-for-crude purchase with Dangote. It’s all naira, no dollar component,” Keyamo explained.