Fuel shortages could remain a feature of global energy markets even after the conflict between the US and Iran ends, as damaged refining facilities, delayed maintenance and efforts to rebuild fuel reserves continue to weigh on supply, according to Dangote Refinery CEO David Bird.
The Nigerian refinery is positioning itself for a much larger role in the international fuel market. Dangote intends to double its refining capacity to 1.4 million barrels per day by 2029, bringing it closer to the scale of India’s massive Jamnagar refining complex.
Bird said the industry entered the Iran conflict with refineries already operating at high utilisation levels. Damage to facilities in the Middle East has added further pressure, while countries are also seeking to strengthen their fuel security by rebuilding inventories and holding larger reserves.
“We went in at high refinery utilisation rates,” Bird said, noting that deferred maintenance and damage to Middle Eastern facilities would make it difficult to restore supply quickly.
The disruptions have provided a major boost to Dangote, which has benefited from tighter global supplies caused by conflicts involving the US and Iran and Russia and Ukraine. The resulting disruption to refining operations and fuel exports has pushed demand towards alternative suppliers.
Dangote’s performance has reflected that shift. The refinery recorded an after-tax profit of $1.82 billion in the first half of the year, reversing a $476 million loss reported for the previous full year.
The plant is currently operating at its full capacity of 700,000 barrels per day. Bird said the stronger operating environment has also transformed the financial outlook for the company’s long-term expansion programme, known as Vision 2030.
The planned doubling of capacity forms part of a $14.3 billion expansion programme. New refining and petrochemical units are expected to broaden the range of products manufactured at the site, including different diesel specifications, while reducing Nigeria’s reliance on imports of certain petrochemical products.
Dangote is also considering a second refinery in Kenya as it looks to expand its footprint across Africa.
Meanwhile, the company is preparing for an initial public offering aimed at raising around $1.63 billion. The offering is expected to place a strong emphasis on retail investors, with the subscription period scheduled to run from September 14 to October 13.
With global fuel inventories needing to be replenished and governments placing greater emphasis on supply security, Dangote expects tight refining markets to persist even after the immediate effects of the conflicts fade.
