Nigeria’s state-owned firm raises petrol prices as new supply comes online

Nigeria’s state oil company NNPC Ltd is raising petrol prices by 11% after it started buying fuel from the new Dangote refinery, Africa’s largest.

The new estimated gasoline prices are based on the terms negotiated between NNPC Ltd. and Dangote Refinery, which recognize current international gasoline prices and the prevailing foreign exchange rate in accordance with local petroleum law, the state-owned company said.

NNPC Ltd also confirmed on Monday that it started buying petrol from the Dangote refinery on Sunday and is paying the private refinery in US dollars for the September 2024 takeover. Transactions in the Nigerian local currency, the naira, will only start on October 1, 2024, a added NNPC.

Dangote Refinery is set to ramp up gasoline production soon, which could change global gasoline flows.

The newly operational refinery is poised to transform OPEC’s largest African crude producer from a gasoline importer to a gasoline exporter, impacting the balance of the fuel market, particularly in Europe.

The Dangote refinery began fuel production in January 2024, marking the commissioning of the plant that has seen years of delays.

The refinery, which has a processing capacity of 650,000 barrels per day (bpd), will meet 100% of Nigeria’s demand for all refined petroleum products and will also have a surplus of each for export.

Once the refinery is fully operational sometime in 2025, more than half of its processing capacity is expected to be devoted to gasoline production.

In mid-June, Dangote Group chairman Aliko Dangote said the refinery was delaying the start of gasoline deliveries beyond mid-July.

At the time, Dangote, Africa’s richest man, said the refinery would be able to bring petrol to market by the third week of July.

That timeline has slipped, and most industry analysts expect considerable volumes of Nigerian gasoline to hit international markets next year.

By Tsvetana Paraskova for Oilprice.com

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