Petrol Export: Marketers Set to take on Dangote as Refinery Commences Production 

Petroleum products marketers in Nigeria are unhappy over publicised report quoting senior Dangote Group official as saying that the Dangote refinery would export refined Premium Motor Spirit (PMS) also called petrol to international markets if they are not ready to buy from the facility.

They said, it is a ploy by the company to actualise its monopoly of the market by using unrealistic price to discourage competition. However, some of them commended the Nigerian National Petroleum Company Limited (NNPCL) for intervening to ensure products from the refinery are sold in-country to minimise importation which is straining its finances.

The Dangote refinery is set to soon begin production of petrol potentially upending global petrol flows. For years, Nigeria has been importing the petrol  it consumes, but the newly operational refinery is poised to turn Nigeria from a petrol importer to a key exporter, impacting fuel market balances, especially in Europe.

The Dangote refinery began the production of fuels in January 2024, marking the start-up of the plant that has seen years of delays.

The facility has yet to begin production of petrol but it is on the brink of producing large volumes of the fuel, sources familiar with the operations said.

The refinery is primarily using Nigerian crude, but it is also buying U.S. crude and Brazilian crude as feedstock.

The facility, which has a processing capacity of 650,000 barrels a day (bpd) will meet 100 per cent of Nigeria’s demand for all refined petroleum products and will also have a surplus of each of the products for export.

It is expected that once the refinery is fully operational at some point in 2025, more than half of its processing capacity will be earmarked for petrol production.

The vice president of Oil and Gas at Dangote Industries Limited, Devakumar Edwin, on Monday while featuring on Brekete Family live show, confirmed the refinery has started the production of petrol.

He however said, local oil traders have resorted to importing diesel and aviation fuel, blocking local sales of Dangote fuel.

“We are testing the product (petrol) and subsequently it will start flowing into the product tanks,” but did not say exactly when the petrol would hit the local market.

Edwin said the Nigerian National Petroleum Company Limited, NNPC Ltd, would buy its petrol exclusively. If no one is buying it, we will export it as we have been exporting our aviation jet fuel and diesel,” Edwin said.

“We have been exporting aviation fuel, we have been producing kerosene, we have been producing diesel, but yesterday, we started the production of PMS. So, that was the last stage. The only thing now left out is petrochemicals. So, the good news for the country is we have started producing PMS from our refinery since yesterday (Sunday),” he confirmed.

Asked if the petrol would be sold locally, Edwin replied, “Well, I explained how there has been a kind of a blockade from lifting our products within the country. The traders have been trying to block (it), and so now we have been exporting our petroleum products. PMS, we are ready to pump in as much as possible to the country.”

Commenting on the report, the president of the Petroleum Products Retail Outlets Owners Association, (PETROAN), Billy Gillis-Harry, called on the current administration and other stakeholders to be wary of Dangote Refinery and its fuel price regime with a view to avoiding cannibalization of small businesses in the oil and gas sector.

Gillis-Harry said, it is unpatriotic for the refinery to consider exporting petrol and denying access to consumers in the country.

According to him, the first consideration is Nigeria and then export what is not consumed, stressing that, “We are not saying the price will be less than cost of production but certainly products from the refinery will be a little cheaper than imported petroleum products. Let us agree and believe that the federal government would sell crude to the facility in local currency nonetheless it will take into account the current exchange rate, but even at that certain costs like, freight, demurrage and other associated costs are taken away.”

Although, the PETROAN president, did not confirm any agreement between marketers and Dangote on purchase price or any meeting on accessing products but there are plans to engage the management to secure products especially petrol when it starts rolling out.

Reacting to the reports while speaking on this development, general secretary of Petroleum Dealers Association of Nigeria, PEDAN, Ibrahim Yahaya, said selling products exclusively to  NNPCL is indirectly influencing monopolistic industry.

Yahaya said, the motive is obviously moving towards that direction but with other refineries like Port Harcourt, Warri and Kaduna all expected to produce petrol in no distant time would help to moderate prices and supply.

In his own opinion, former national president of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Elder Chinedu Okoronkwo said, marketers are willing to buy products from Dangote and there won’t be need to think of export while the local market is bleeding.

Okoronkwo, who is currently BoT Chairman (Treasurer) of IPMAN, called for considerable pricing of products from the refinery, saying, he would not expect pump price to go above N750 a liter if Dangote begins production. His calculations covers cost of input expenses from the refinery and output expenses on the part of marketers.

Dangote refinery expects to export diesel to customers in Europe, as well as petrol to Latin American and African markets.

However, production of Euro V petrol, the petrol complying with Europe’s emissions standards, is not expected to be produced until late 2024, according to analysts at Facts Global Energy.