Nigeria’s Dangote oil refinery is likely to come on line from late 2024 at the earliest, London-based Capital Economics has said.
The economic research firm said that while Nigeria’s oil output has continued to rise, the start-up of the refinery will likely eat into crude available for export, with the benefits of the refinery still a long way out.
“Reports suggest the long-delayed oil refinery will begin test runs from December. The start-up happens at a time that Nigerian oil output has performed well, climbing to 1.4m bpd in September, continuing the improvement seen over recent months,” it said in a note on Friday.
Capital Economics said: “While this is encouraging the start-up of the refinery will see up to 200,000 bpd of crude oil for export diverted. This will reduce export revenues in an economy already suffering from liquidity challenges. The expected benefits of the refinery for the fuel import bill are unlikely to be fully realised until the refinery is fully operational in at least a year’s time.
“Even if further delayed, there has been much anticipation about how the refinery will boost the economy. The ramp up is expected to reduce dependence on imported petroleum to meet local fuel demand.”
The firm said that at its full capacity, the Dangote refinery will process about 650,000 bpd of crude oil and produce around 50mn litres of petrol per day, meeting up to three-quarters of daily consumption.
“That said, with crude exports diverted, the boost to the balance of payments will be confined to the difference in prices between refined and crude products – the so-called crack spread.”