Dangote refinery expands storage capacity to secure imported crude amid supply challenges

In response to an ongoing shortage of locally sourced crude oil, Dangote Petroleum Refinery is building eight additional storage tanks to bolster its capacity for imported crude oil. This expansion, aimed at increasing storage by 6.29 million barrels (or 1 billion liters), is a key part of the refinery’s strategy to ensure a reliable crude supply.

The $20 billion refinery has faced significant challenges with the local supply of crude, with officials noting that the Nigerian National Petroleum Company Limited (NNPC) is struggling to meet demand.

The new tanks, which will increase crude storage by 41.67 per cent to 3.4 billion liters, come as part of a larger effort to maintain stable production levels despite unreliable domestic crude supplies. Edwin emphasized the importance of higher storage volumes to accommodate the refinery’s increasing reliance on imported crude: “Importing crude from other countries instead of buying locally means that our crude stockpiles will have to be higher,

“So we have started building eight additional crude tanks to hold a billion litres, over and above our original storage capacity. Four of them are nearing completion.” said Devakumar Edwin, Vice President of Oil and Gas at Dangote Industries.

Currently, the refinery boasts 20 storage tanks with a combined capacity of 2.4 billion liters for crude, in addition to 2.34 billion liters dedicated to refined products. The refinery began producing diesel and aviation fuel in January 2024 and started refining petrol in September, with products reaching both domestic and international markets.

While Dangote has been producing fuel at scale, the supply of crude from the NNPC remains insufficient, according to Edwin. Nigeria’s oil industry continues to battle issues of underinvestment, pipeline vandalism, and theft, leading to a decline in the country’s crude production. Despite these setbacks, the Nigerian Upstream Petroleum Regulatory Commission reported that production reached 1.45 million barrels per day as of November 2024, just shy of Nigeria’s OPEC quota.

Dangote’s expansion of storage facilities could signal a shift in the country’s oil supply dynamics, particularly regarding the Naira-for-Crude initiative introduced by President Bola Tinubu. Under this policy, the NNPC began selling crude to Dangote refinery in exchange for payment in naira, a move aimed at supporting local refineries. However, recent challenges surrounding crude availability suggest that the naira-for-crude deal might be losing momentum as Dangote increasingly turns to imported crude to meet its production needs.

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