Recently, something monumental happened in Nigeria’s energy sector—a sector that has been plagued with inefficiencies for decades. The Dangote Oil Refinery finally began producing gasoline and selling it locally. For the first time in ages, Nigeria—Africa’s largest oil producer—is refining its own crude. Let that sink in.
This $20.5 billion state-of-the-art refinery, which opened up in January 2024, started producing gasoline in September And what a capacity it has! The refinery processes 650,000 barrels of crude per day—bigger than any refinery in Europe. This is more than enough to meet Nigeria’s domestic fuel needs and then some.
Here is a golden reason for Nigerians to rejoice: the refinery buys crude oil locally and sells refined products in naira. This single move reduces the pressure on foreign exchange the dollar!
Taking Back Control of Our Energy Future
The impact is already being felt beyond Nigeria. The Dangote Refinery is disrupting Europe’s long-standing gasoline market, which has traditionally supplied petroleum products to Africa. That $17 billion annual gasoline trade from Europe to Africa? It’s on shaky ground, thanks to Dangote. And guess what? The Nigerian government is saving billions annually by reducing its reliance on imports. That’s money that can now be redirected to education, healthcare, and infrastructure.
But it’s not all smooth sailing. Dangote’s groundbreaking efforts have ruffled the feathers of Nigeria’s infamous oil mafia—a powerful cartel that has controlled the industry for decades. Aliko Dangote himself admitted this at an investment conference, saying, “I knew there would be a fight, but I didn’t realize how strong these cartels are.”
These mafias thrive on Nigeria’s long-standing practice of swapping crude oil for refined products. This system has been opaque for decades, and until recently, only a few insiders knew how much money was being made—or stolen. With Dangote’s refinery cutting out the middlemen, the cartel is feeling the heat, and the fight is far from over.
Challenges Ahead
Even as we celebrate, let’s not ignore the challenges. Nigeria’s crude oil production has been declining, falling from 2.1 million barrels per day in 2018 to just 1.3 million barrels today. Oil theft and vandalism have wreaked havoc on pipeline infrastructure. The CEO of NNPC, Mele Kyari, described the situation bluntly: “Every molecule of product we put in gets lost.”
This has direct implications for the refinery. Right now, the Dangote Refinery needs more crude than the NNPC can supply, with only about 300,000 barrels per day available. This shortfall could limit the refinery’s ability to operate at full capacity, and unless we address oil theft and infrastructure issues, the refinery’s full potential might remain untapped.
Why This Matters to You
The Dangote Refinery is not just a business success; it’s a symbol of what’s possible in Nigeria when private-sector innovation meets political will. It’s a step towards energy independence, job creation, and a stronger economy. But to make this a lasting success, we—Nigerians at home and abroad—must play our part.
Here’s what needs to happen:
- Fight Corruption: We need to back efforts to dismantle the oil mafia , some of you reading this know them as your helpers, but they are also the same people keeping Nigeria growth at infancy!
- Fix Infrastructure: It’s time to secure and upgrade our pipelines. Without this, crude oil theft will continue to cripple our economy.
- Support Reform Policies: The removal of fuel subsidies and market-driven exchange rates may be painful now, but they’re necessary to create a sustainable future. Let’s push for more reforms that empower industries like Dangote’s.
- Invest in Renewable Energy: While oil is king today, we must think about the future. Diversifying our energy sources will make us more resilient in the long run.
The Road Ahead
The Dangote Refinery is more than just a refinery; it’s a statement of intent. It tells the world that Nigeria is ready to take control of its destiny. But this isn’t just Dangote’s fight—it’s ours too. Institutions, private individuals, and the government must all step up to ensure this refinery becomes a shining example of what we can achieve.
Let’s keep our eyes on the prize, Nigeria. The road ahead is challenging, but with determination, transparency, and collective effort, we can ensure that this refinery sparks the change we’ve all been waiting for. The ball is in our court—let’s not drop it.
This is more than just oil. This is Nigeria’s future. Let’s protect it.
Sam Onigbanjo, CEO- Capital Markets Academy
Forex Trader and VC