Dangote Refinery increases storage capacity

Nigeria’s 650,000 barrel per day (bpd) Dangote Refinery is currently constructing eight new oil storage tanks to help tackle issues with crude supply.

The new tanks are slated to boost the plant’s storage capacity by 6.29mn barrels (1mn litres) – an increase of around 41.67% from 2.4bn litres to 3.4bn.

Dangote currently runs 20 crude oil storage tanks with a combined capacity of 2.34bn litres and recently started production of diesel and aviation fuel in January 2024 and petrol in September. Consistent issues with sourcing feedstock from the Nigerian National Petroleum Co. Ltd (NNPCL) has pushed the refinery to develop new methods to ensure reliability, with a particular focus on purchasing more imported crude alongside the aforementioned tanks. The primary reasons for this decision were communicated by Dangote Industries VP Devakumar Edwin, who noted that “unreliable” local supplies of oil and gas had moved the company towards its current predicament.

NNPCL crude supplies are sold to local refineries in naira under the naira-for-crude policy introduced by President Bola Tinubu in August last year, which was aimed at reducing the price of petroleum products and reduce shortages of crude.

Despite these measures, however, Nigeria’s oil industry continues to struggle with underinvestment, crude theft and pipeline vandalism. These issues have affected the NNPCL’s ability to source adequate amounts of crude, which consequently prevents the country’s domestic plants from running at full capacity.

Dangote’s choice to expand its facilities and increase its use of imported crude should help alleviate these issues just as the refinery begins to ramp up the production of petrol for local consumers. Regarding the refinery’s decision, Edwin noted that: “Importing crude from other countries instead of buying locally means that our crude stockpiles will have to be higher”. He concluded that solving this issue would require “eight additional crude tanks to hold a billion litres, over and above our original storage capacity. Four of them are nearing completion”.