Dangote Making More Money From Jet Fuel Export While Airlines in Nigeria Lament Shortage, Price Hike
- Dangote refinery is benefiting from strong global demand and margins for jet fuel exports
- The refinery operates at 650,000 barrels per day but relies heavily on imported crude
- Global energy disruptions and deregulation continue to influence fuel pricing in Nigeria
Oluwatobi Odeyinka is a business editor at Legit.ng, covering energy, the money market, technology and macroeconomic trends in Nigeria.
Nigeria’s Dangote Refinery is benefiting from strong global margins on jet fuel exports, even as domestic airlines warn of potential disruptions due to rising aviation fuel prices, Reuters reported.
The development reflects a growing tension between export opportunities and local supply challenges in Nigeria’s deregulated fuel market.
Source: UGC
The refinery, owned by the Dangote Group, became fully operational earlier this year and is producing at its peak capacity of 650,000 barrels per day.
While this has improved fuel availability in the country, prices remain among the highest in Africa due to the absence of government subsidies.
Industry analysts note that Nigeria’s deregulated market structure means fuel prices are largely determined by global dynamics.
Airlines raise concerns over jet fuel costs
The Airline Operators of Nigeria (AON) said aviation fuel prices have surged to about N3,300 per litre when logistics and storage costs are included.
This represents a sharp increase compared to levels recorded earlier in the year.
However, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) said Dangote refinery’s jet fuel price stood at about N1,879 per litre, broadly in line with imported fuel prices of around N1,900 per litre delivered to Lagos.
The price surge has prompted airlines to threaten a shutdown of operations, leading the federal government to initiate discussions and approve relief measures, including support for outstanding debts.
Global factors drive market pressure
The situation has been compounded by global energy disruptions linked to tensions in the Middle East, which have driven up jet fuel prices worldwide.
Airlines across multiple regions have responded by increasing fares, introducing fuel surcharges, and, in some cases, reducing flight operations.
Export strategy and crude sourcing challenges
Despite local demand, the refinery exports a significant share of its jet fuel production, particularly to Europe, where buyers are paying a premium ahead of peak summer travel.
A senior executive at Dangote Group, Davekumar Edwin, disclosed that most of the refinery’s crude supply is imported from the United States, as well as other African countries and Brazil.
This is partly due to constraints involving the Nigerian National Petroleum Company Limited (NNPC), whose crude oil commitments are tied to existing loan agreements and pre-export deals.
Analysts estimate that about 400,000 barrels per day of Nigeria’s crude production is allocated to servicing such obligations.
Source: Getty Images
Strong margins support profitability
According to market analysts, Dangote refinery is capitalising on record refining margins, particularly for jet fuel.
Alan Gelder of Wood Mackenzie said European refiners are earning about $15 per barrel, while Dangote’s margins could be more than double due to operational efficiency and scale.
He added that being a private refinery, Dangote prices its products based on global market conditions, meaning increased local refining capacity does not necessarily translate to lower domestic prices.
The refinery is also planning a share listing in the coming months and is working to expand its capacity to 1.4 million barrels per day.
If completed, this could position it as one of the largest refining facilities globally by the end of the decade.
Nigerian airlines face delays over aviation fuel crisis
Air travellers in Nigeria are experiencing delays and uncertainty as a prolonged shortage of aviation fuel, known as Jet A1, continues to disrupt flight operations across major airports.
Airlines say the scarcity is affecting their ability to maintain schedules, leading to delayed, rescheduled, and in some cases, cancelled flights.
According to operators, the situation has worsened in recent days, leaving many passengers stranded and forcing others to reconsider their travel plans.
Source: Legit.ng
