Nigeria’s Dangote Refinery has made headlines by operating at 85% capacity, producing 550,000 barrels per day (bpd), with plans to deliver European-standard products by January. In contrast, Ghana’s Tema Oil Refinery, with a capacity of 45,000 bpd, has struggled to maintain consistent operations and has faced significant financial challenges. While Dangote’s refinery is poised to become a major player in the global oil market, the Tema refinery’s limitations highlight the blunt differences in refining capabilities between the two West African nations.
The Dangote Refinery, built by billionaire Aliko Dangote, aims to reduce Nigeria’s reliance on imported fuel and compete with European refiners. It has begun processing various products since January 2024, including diesel and petrol. Conversely, Tema Oil Refinery has been plagued by operational inefficiencies and financial mismanagement, leading to intermittent closures and a reliance on imports to meet domestic fuel demands. This operational success disparity stresses Nigeria’s potential to achieve energy self-sufficiency while Ghana continues to contend with supply issues.
One of the critical challenges for the Dangote Refinery has been securing sufficient local crude oil supply due to disputes with the Nigerian National Petroleum Corporation Limited (NNPCL). This situation forced the refinery to source crude from international markets. In comparison, Tema Oil Refinery has historically faced similar challenges but lacks the scale and infrastructure to effectively address them. The smaller capacity of Tema limits its ability to negotiate favourable crude supply agreements, further worsening its operational difficulties.
Financially, the Dangote Refinery is backed by weighty investment, approximately $20 billion, allowing it to enhance its operational capabilities and expand production. In contrast, Tema Oil Refinery has struggled with debt and inadequate funding for maintenance and upgrades. This financial disparity not only affects production capacity but also impacts the ability to invest in modern technology that could improve efficiency and output.
Moreover, the pricing strategies employed by both refineries illustrate their market positioning. Recently, Dangote reduced petrol prices from 970 naira ($0.63) to 899.50 naira ($0.58) per liter to alleviate transport costs during the holiday season. This move reveals a competitive strategy aimed at capturing market share in Nigeria’s fuel sector. Meanwhile, Tema Oil Refinery often faces criticism for high fuel prices due to its operational inefficiencies and reliance on imported refined products.
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Looking ahead, while the Dangote Refinery is projected to reach full operational capacity by early 2025, Tema Oil Refinery’s future remains uncertain without major reforms and investment. The success of Dangote’s venture could position Nigeria as a net exporter of refined products, fundamentally altering the dynamics of West Africa’s energy setting.
In contrast, Ghana must address its refining challenges urgently if it hopes to remain competitive in an increasingly interconnected global market.
