Dangote Refinery Begins Direct Fuel Shipments, Reshaping Nigeria’s Oil Sector

Africa’s largest oil refinery, the Dangote Refinery, will begin direct and cost-free fuel deliveries to Nigerian retailers starting Friday — a move expected to significantly shake up the oil industry in Nigeria, the continent’s top crude producer. The refinery, owned by billionaire Aliko Dangote, aims to eliminate intermediaries in the supply chain, improve efficiency, and offer more competitive pricing to both consumers and fuel retailers.

Commissioned in 2023 with a refining capacity of 650,000 barrels per day, the Dangote facility has already helped reduce pump prices, which had soared following the federal government’s removal of fuel subsidies. Before its launch, Nigeria’s oil import system relied heavily on foreign refineries and a powerful network of middlemen, which analysts say hindered domestic refining for decades.

Nigeria, where crude was first discovered in 1956, currently produces around 1.5 million barrels daily—below its 2 million bpd target. Although oil accounts for approximately 62% of the nation’s export revenue, the sector is burdened by corruption, oil theft, outdated infrastructure, and environmental degradation. Local refining has been largely ineffective, with four state-run refineries (totaling 445,000 bpd capacity) suffering from chronic mismanagement and poor maintenance.

Dangote’s venture represents a seismic shift, not only in refining but also in distribution. The company plans to deploy 4,000 compressed natural gas-powered trucks to ease logistics and reduce distribution costs, challenging the dominance of over 20,000 diesel-fueled tankers. However, not all industry players are enthusiastic. While the initiative promises lower inflation and better fuel access, groups like the Independent Petroleum Marketers Association of Nigeria warn of a looming monopoly.

Major oil marketers, including Oando and TotalEnergies, have reported declining revenues since the refinery began operations — with Oando citing reduced imports due to increased domestic refining capacity. Meanwhile, a second private refinery, being built by billionaire Abdulsamad Rabiu’s BUA Group, signals further transformation ahead.

Despite the sector’s vast earnings potential, its legacy includes environmental disasters and recurring fuel truck accidents. Many Nigerians still live in poverty, often risking their lives to scavenge spilled fuel — a stark contrast to the wealth generated by the nation’s oil.