International Courant
In 2013, Aliko Dangote, a Nigerian businessman and Africa’s richest man, unveiled the primary plan to construct a refinery in Nigeria. He had secured roughly $3.3 billion in financing for the challenge. It was excellent news for Nigeria, which was Africa’s prime oil producer however had been exporting crude for years due to issues refining the crude. Nigeria has 4 refineries with a mixed capability of 445,000 barrels per day, however they’ve been working at a fraction of their potential for years.
So even when the refinery took longer than anticipated, it could initially begin operations 2020, then within the first half of 2021. And at last, in 2023, the nation remained considerably hopeful. Final Might, the refinery’s grand inauguration ceremony attracted distinguished figures from throughout Africa, symbolizing hope and progress for the continent. In Nigeria, it promised reduction from excessive gas costs following the elimination of presidency subsidies, whereas native producers, particularly within the cosmetics and detergent industries, anticipated entry to inexpensive domestically produced base oils. The timing additionally aligned completely with the rising African Continental Free Commerce Space (AfCFTA), which fueled goals of regional commerce and integration. Nonetheless, the wait lasted till January 13, 2024, when the refinery introduced – as a New Yr’s present – that it could produce the primary batch of diesel and jet gas. Nonetheless, experiences it has emerged that the Dangote refinery will import crude oil from the US within the coming months, with 2 million barrels of WTI Midland to be delivered by the top of February.
Why is that this an issue?
Refining is the method of changing crude oil into helpful merchandise reminiscent of gasoline, diesel, jet gas, kerosene and liquefied petroleum gasoline. The method includes separating, changing and treating the crude oil elements into completely different fractions based mostly on their boiling factors, molecular weight and chemical properties. The unique thought was that the Dangote refinery would refine Nigerian crude oil, which is normally gentle and candy, which means it has a low density and low sulfur content material. Such a crude oil is simpler and cheaper to refine as a result of it requires much less processing and produces extra high-quality merchandise. Nonetheless, the refinery was additionally designed to course of a wide range of crude oil sorts, together with heavier and bitter sorts, reminiscent of these from the US and Saudi Arabia.
Furthermore, the Dangote refinery has been vital to Nigeria. It signifies hope that Nigeria can lastly cut back its dependence on imported petroleum merchandise, that are presently liable for the overrun 90% of the nation’s consumption. This lowered dependence will increase Nigeria’s vitality safety and reduces vulnerability to exterior provide shocks, reminiscent of worth fluctuations, sanctions or disruptions. Nonetheless, importing might undermine these financial implications and the chance prices of not utilizing home crude oil for native improvement.
First, it’s dearer for Dangote to import, leaving Nigerians to bear the burden. Since final 12 months, the naira has undergone a major depreciation. The alternate will happen from February 1 fee rose to about N1,320/$1 throughout afternoon buying and selling on the official market. Shopping for non-Nigerian crude additionally removes the entire thought of stabilizing the Naira by means of the refinery. “You can’t anticipate the corporate to import with USD {dollars} and promote on Naira phrases,” mentioned Ndubuisi Ekekwe, chairman of Tekedia capital. “But I made the purpose right here that promoting crude oil for quick money will create a sufferer, and that sufferer can be our native refineries. If we subtract the Nigerian crude oil ships from those that gave us loans as a part of compensation and the little we have to run the nation’s affairs, we might not have sufficient for firms like Dangote Refinery, based mostly on of our manufacturing capability, regardless of nationwide obligations to produce them with feed,” he added.
Simply one other pipeline dream?
Importing crude oil from the US, or some other nation for that matter, as an oil big in Africa appears ironic. Nigeria has the most important confirmed oil reserves in Africa, estimated at 45 billion barrels in 2022. Nonetheless, the nation’s oil manufacturing has declined in recent times. In 2020, Nigeria produced a mean of 1.8 million barrels per day, down from 2.1 million barrels per day in 2019. As of August 2022, manufacturing fell to 972,394 barrels per day, a decline of 30.22 p.c, inflicting Nigeria’s manufacturing to say no . standing as Africa’s oil big. One of many the reason why Nigeria has not been in a position to meet the rising demand for gasoline within the home market is the low and controlled pricing of gasoline for home use. This discourages gasoline producers from supplying the native market and causes them to desire the extra profitable export market. The frequent disruptions and vandalism of gasoline pipelines and amenities by militants and criminals have additionally affected the security and reliability of gasoline provides.
Along with the home provide scarcity, the worth of crude oil from Nigeria is excessive. In accordance with the Central Financial institution of Nigeria, the common worth of Nigerian crude oil (Bonny Mild) on January 19, 2024 was $82.86 per barrel greater than the worldwide worth. benchmark Brent crude oil worth $79.34 per barrel. That is attributed to Nigerian crude oil’s excessive API gravity (the measure of how gentle or heavy the oil is in comparison with water). The upper the API gravity, the extra beneficial the oil is. Nigeria’s crude oil has a API gravity of 35.3 levels, greater than the world common of 32.7 levels.
As well as, Dangote needs to construct the world’s largest single-train refinery, with a capability of 650,000 barrels per day, which is able to meet Nigeria’s home demand and create a surplus for exports. Moreover, Dangote’s imaginative and prescient is to ascertain a world-class vitality hub that may serve the Nigerian and African markets and compete globally. Thus far, the enterprise mogul has carried out simply that invested about $19 billion into the challenge, which he expects will generate $30 billion in annual income. Due to the rise of shale oil, the US has turn into a serious exporter of crude oil and petroleum merchandise in recent times. In 2023 the USA exported roughly 11.5 million barrels of crude oil and petroleum merchandise per day, of which roughly 3.99 million barrels per day of crude oil.
Moreover, the placement of the refinery in Nigeria doesn’t imply that Nigeria would be the sole buyer or provider of the refinery. It simply implies that Nigeria should be a precedence buyer/provider. Saudi Aramco, a state-owned oil firm in Saudi Arabia, is an instance of this strategy. The corporate operates 5 refineries. Three prioritize home wants, utilizing regionally produced crude oil. By importing crude oil from different sources such because the US and Saudi Arabia, the refinery can optimize its profitability and adaptability as it may well adapt to market situations and demand. “What can be attention-grabbing is that as a result of the US, regardless of being the most important producer of crude oil on the planet, nonetheless typically must import petrol, it’s solely attainable that Dangote Refinery will export petrol to the US sooner or later similar approach as Dangote. Fertilizer is presently exporting urea to the US,” mentioned Tolu Ogunlesi through a submit on X (previously Twitter). Nonetheless, it is no shock that persons are involved. The refinery has generated many expectations earlier than its launch, each life like and unrealistic, because of its potential influence on the Nigerian economic system. Nonetheless, it seems that the Dangote refinery, one of many largest on the planet, has a capability that Nigeria alone can not make the most of.
Why is the Dangote refinery importing crude oil from the US?
Africa Area Information ,Subsequent Huge Factor in Public Knowledg
