In a dramatic reshaping of Nigeria’s oil export landscape, Dangote Petroleum Refinery has secured 13% of the country’s crude oil exports for domestic supply in 2024. This represents a significant leap from the mere 2% domestic share Nigeria held in 2023, marking a substantial shift in the dynamics of Nigeria’s crude oil trade and its refining capabilities.
The Dangote Refinery, Africa’s largest single-train refinery with a capacity of 600,000 barrels per day (bpd), has quickly emerged as a dominant player in Nigeria’s oil industry. This development comes at a time when global crude export volumes have seen a noticeable decline of 2% in 2024, the first drop since the COVID-19 pandemic. The reshuffling of global oil trade routes, driven by geopolitical tensions and sanctions, has opened new opportunities for refiners in emerging economies like Nigeria to secure a larger share of their domestic supply.
Experts and industry analysts see the rise in Nigeria’s domestic oil retention as a pivotal moment. “The Dangote Refinery’s capacity to refine domestic crude is positioning Nigeria as not just an exporter, but as a key player in the refining game,” said Tunde Olayiwola, an oil industry analyst with Eco Petroleum Ltd. “This not only strengthens the local economy but also reduces Nigeria’s dependency on foreign oil imports.”
The Global Shifts in Oil Trade
According to Reuters, 2024 has been a year of turmoil in global oil markets. Conflicts such as the war in Ukraine and the ongoing tensions in the Middle East have forced significant changes in oil trade routes. The sanctions on Russian oil, combined with disruptions to shipping in the Red Sea, have further redefined how and where oil is traded across the world.
For Nigeria, this global shift has had direct implications. While the country remains one of the largest exporters of crude oil, it has also seen a marked increase in imports, particularly from the United States. In November 2024, Dangote Refinery received its first shipment of West Texas Intermediate (WTI) crude oil, marking the start of a series of imports that have bolstered Nigeria’s overall crude oil trade.
Despite being a major crude exporter, Nigeria’s import of 47,000 barrels per day of US oil in 2024 raises eyebrows among experts. “This is unusual for a country that exports millions of barrels of crude daily,” said Sarah Okafor, a Nigerian oil and gas consultant. “It speaks to the complexities of the global market, where even major exporters are forced to import oil due to local refining limitations.”
Refinery Challenges and Opportunities
Though Dangote’s refinery has been operational, it has not yet reached full capacity. As Nigeria struggles with an underperforming refining sector, the Dangote refinery has become essential in meeting local demand for refined products like Premium Motor Spirit (PMS), diesel, and jet fuel. With exports already reaching several African countries including Cameroon, Angola, and South Africa, the refinery’s influence is spreading well beyond Nigeria’s borders.
However, the refinery’s increasing reliance on imported US oil points to the ongoing challenges within the Nigerian oil sector. The Nigerian National Petroleum Company (NNPC), which has been struggling with supply chain and logistical issues, has failed to consistently meet the refinery’s demand for local crude. “This is a temporary but pressing issue,” said Olayiwola. “The refinery could be a game-changer for Nigeria’s energy independence, but it will require stable domestic crude supply to achieve its full potential.”
The Global Oil Market in Flux
2024 has witnessed a reorientation of oil trade routes as European refiners, in particular, shifted focus away from Russian oil following its invasion of Ukraine. Many refiners turned to the US and the Middle East for oil, while countries like India and China embraced Russian crude. At the same time, sanctions on Iran and instability in the Middle East further complicated oil trade dynamics.
“The changing flow of oil across borders is the result of a convergence of geopolitical factors and a reshuffling of alliances,” said Erik Broekhuizen, a marine research and consulting manager at Poten & Partners. “This type of volatility and unpredictability is the new normal for the global oil market.”
For Nigeria, this uncertainty provides both risks and opportunities. Experts are divided on what the future holds, especially in terms of global demand. While some analysts predict rising demand for oil in India, others express concern about China’s oil consumption in 2025, as the country continues to diversify its energy sources.
As Nigerian officials and industry leaders turn their attention to the coming year, it is clear that the Dangote Refinery will play an increasingly pivotal role in the country’s oil export strategy. With local refining capacity on the rise, Nigeria is positioning itself to capitalize on both domestic and international oil market fluctuations.
The Road Ahead
As for Dangote Refinery, its future looks promising, but the road to full capacity is fraught with challenges. The need for a consistent supply of Nigerian crude, as well as solutions to the nation’s energy sector woes, will determine whether Nigeria can continue to build on this momentum. The refinery’s success in meeting domestic demand has already had ripple effects, but whether it can mitigate the impact of external disruptions on Nigeria’s crude exports remains to be seen.
“Nigeria must ensure that its domestic oil infrastructure is capable of handling the increasing demand for refined products,” said Okafor. “If it can maintain a stable supply chain, the Dangote Refinery could be a cornerstone for Nigeria’s energy future.”
