The $20 billion Dangote refinery is poised to reach its maximum refining capacity of 650,000 barrels per day by June 2025, according to recent announcements by officials at the facility. Currently, the refinery is operating at 500,000 barrels per day, but plans are in place to ramp up production to meet its intended capacity.

The major hurdle that has been hindering the refinery from reaching its full potential is the local crude deficit. To address this, the refinery has announced plans to import crude oil from outside Nigeria to supplement its current supply. This move is expected to enable the refinery to increase its production to 650,000 barrels per day.

The Nigerian National Petroleum Cooperation (NNPC) currently distributes between 350,000bpd to 450,000bpd of crude to the Dangote refinery. However, this is insufficient to meet the refinery's needs, prompting the decision to import additional oil. According to sources, the refinery will need to buy additional oil to reach its goal, even with the naira-for-crude contract in place.

The Dangote refinery has had a tumultuous relationship with the NNPC in the past. Last year, the two entities got into a dispute that hindered local production of premium motor spirits (petrol). The refinery accused the NNPC of preventing it from accessing locally produced crude by selling it at market price in US dollars rather than Naira, or claiming it was unavailable. This led the refinery to acquire oil from the international market at a high cost.

However, the federal government's initiative to sell crude oil to the Dangote refinery and other refineries in its local currency, the naira, commenced on October 1, 2024. This program, known as the naira-to-crude initiative, allows crude to be sold to the refinery in naira, in exchange for petrol and diesel of similar value to be delivered to the domestic market, also in naira.

The Minister of Finance, Wale Edun, confirmed the commencement of this policy in a signed statement on October 5, 2024. This development is expected to have a significant impact on the Nigerian oil market, as the Dangote refinery is set to become a major player in the industry.

As the refinery prepares to reach its maximum capacity, it is likely to have far-reaching implications for the Nigerian economy and the oil industry as a whole. With the ability to produce 650,000 barrels per day, the refinery will be able to meet a significant portion of the country's fuel demands, reducing reliance on imported products and boosting the local economy.

In conclusion, the Dangote refinery's plans to reach its maximum capacity by June 2025 are a significant development for the Nigerian oil industry. With the resolution of the local crude deficit and the implementation of the naira-to-crude initiative, the refinery is poised to become a major player in the industry, driving growth and development in the country.