Dangote Refinery expands storage capacity

Nigeria’s 650,000 barrels-per-day (bpd) Dangote Refinery is constructing eight additional oil storage tanks to address challenges with crude supply.

These new tanks will increase the refinery’s storage capacity by 6.29 million barrels (1 million liters), representing a 41.67 percent boost from the current capacity of 2.4 billion liters to 3.4 billion liters.

The refinery currently operates 20 crude oil storage tanks with a combined capacity of 2.34 billion liters. It commenced diesel and aviation fuel production in January 2024 and began producing petrol in September 2024.

Persistent issues with securing feedstock from the Nigerian National Petroleum Company Limited (NNPCL) have driven the refinery to adopt alternative strategies to ensure reliability. These include increasing imports of crude oil in addition to expanding storage capacity.

Devakumar Edwin, Vice President of Dangote Industries, highlighted that unreliable local supplies of oil and gas have necessitated these measures. He stated, “Importing crude from other countries instead of buying locally means that our crude stockpiles will have to be higher.”

To address this, the refinery plans to construct eight additional crude tanks, four of which are nearing completion.

The NNPCL supplies crude to local refineries under the naira-for-crude policy, introduced by President Bola Tinubu in August 2023. This policy aims to reduce petroleum product prices and alleviate crude shortages.

However, Nigeria’s oil sector continues to face significant challenges, including underinvestment, crude theft, and pipeline vandalism. These issues have hampered NNPCL’s ability to supply adequate crude, limiting the operational capacity of domestic refineries.

Dangote’s decision to expand its storage facilities and increase reliance on imported crude is expected to mitigate these challenges as the refinery scales up petrol production for local consumption.