Nigeria's Refining Boom Hits Crude Supply Wall

Nigeria's refining boom has hit a snag due to a lack of crude oil supply. The country has been investing heavily in domestic refining capacity, but it appears that there isn't enough crude to go around.

Africa's largest single-train refinery, the Dangote Petroleum Refinery, with 650,000 barrels per day of installed capacity, briefly abandoned naira pricing and began quoting petrol, diesel, and jet fuel in dollars this month. This move was seen as a sign that Nigeria is struggling to meet its domestic refining demands.

According to PAC Research, the country's production needs to increase to 2 million barrels per day to satisfy both domestic refining ambitions and export contracts. However, current production levels stand at around 1.6 million barrels per day, with a small margin for error.

The situation is set to become increasingly precarious as the demand for crude continues to grow. Any slippage in production or increased competition for available crude could lead to periodic dollar-based purchases and gantry disputes.