Amanze Chinonye
The Chief Executive Officer of the Dangote Refinery, David Bird, has warned that a potential global oil supply shortage could pose a greater threat to economies than the recent surge in crude oil prices.
Speaking during a media briefing on rising fuel costs and tightening global supply, Bird said some countries are already grappling with panic buying and rationing of petroleum products as supply pressures intensify.
“What would be worse than a $120 oil is no oil,” he said, noting that supply disruptions could have more severe consequences for economies than high crude prices.
Join our WhatsApp ChannelBird acknowledged the hardship caused by rising fuel costs, adding that the refinery is making efforts to reduce operational expenses where possible.
“I fully acknowledge the pain that is being suffered. We are seeing that, we are doing what we can to ensure that we minimise cost throughout our supply chain,” he said.
Global Pricing Pressures
Bird explained that the refinery operates within the global crude oil market and therefore faces international pricing dynamics that affect the cost of refined products.
“We purchase Nigerian crude from the government at international benchmark prices, we then pay international freight and insurance rates. All these add further costs to purchasing the barrels and refining it,” he said.
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According to him, these factors mean that the price of refined products cannot be completely insulated from global market movements even when the refining takes place locally.
Energy analysts say that while domestic refining improves supply stability, it does not automatically translate to cheaper fuel if crude oil is still priced according to international benchmarks and refiners must also cover global logistics and insurance costs.
They note that fuel prices would only significantly drop if crude supplied to local refiners is priced domestically rather than strictly tied to global benchmark levels.
Capacity and Nigeria’s Fuel Supply
The Dangote Refinery, with a processing capacity of about 650,000 barrels per day, is the largest single-train refinery in Africa and among the biggest globally.
Bird said the facility is currently operating at full capacity and has the potential to scale output further.
The refinery can produce between 50 million and 55 million litres of petrol daily, exceeding Nigeria’s estimated daily demand of about 35 million litres, a development analysts say could help stabilise domestic fuel supply even during global disruptions.
Amanze Chinonye is a Staff Correspondent at Prime Business Africa, a rising star in the literary world, weaving captivating stories that transport readers to the vibrant landscapes of Nigeria and the rest of Africa. With a unique voice that blends with the newspaper's tradition and style, Chinonye's writing is a masterful exploration of the human condition, delving into themes of identity, culture, and social justice. Through her words, Chinonye paints vivid portraits of everyday African life, from the bustling markets of Nigeria's Lagos to the quiet villages of South Africa's countryside . With a keen eye for detail and a deep understanding of the complexities of Nigerian society, Chinonye's writing is both a testament to the country's rich cultural heritage and a powerful call to action for a brighter future. As a writer, Chinonye is a true storyteller, using her dexterity to educate, inspire, and uplift readers around the world.
