By Ukumbi Afrika 
August 26, 2026
Nigeria’s Dangote Refinery is expected to seek about $5 billion in an initial public offering (IPO) in October, potentially making it Africa’s largest IPO to date. But as investors assess the refinery’s strong earnings and expansion plans, attention is increasingly turning to the cost and availability of crude oil supplies.
The 650, 000-barrel-per-day refinery, majority-owned by Nigerian billionaire Aliko Dangote, has benefited from stronger refining margins following disruptions to Middle Eastern oil and fuel supplies linked to the Iran war.
The refinery reached its initial maximum capacity of 650, 000 barrels per day in February and has already tested production at 700, 000 barrels per day. Dangote plans to double capacity within three years, with the IPO expected to help finance the expansion.
Crude Supply Emerges As Key Investor Risk
Despite Nigeria producing about 1.6 million barrels of crude per day, Dangote cannot rely entirely on domestic supplies.
David Bird, chief executive of Dangote Refinery, told Reuters that imports account for around 30% to 40% of the refinery’s crude intake.
Much of the crude produced through joint ventures involving the Nigerian National Petroleum Company Limited (NNPC) is already committed to oil-backed loans and pre-export financing arrangements, limiting the volumes available to domestic refiners.
For investors, the issue is not only whether crude is available but also whether Dangote can obtain it at competitive prices.
“Challenges in accessing feedstock at competitive prices would increase costs and compress margins and utilisation rates, ” said Mikolaj Judson, an analyst at risk consultancy Control Risks.
Imports Add To Cost Pressure
Dangote has increasingly sourced crude from other African producers and international suppliers, including the United States and Guyana.
Imported crude is priced in dollars, exposing the refinery to international oil prices and currency-related pressures.
Dangote has also argued that some domestic Nigerian crude can be expensive because NNPC pricing is linked to international benchmarks such as Brent, incorporating freight and logistics costs even when crude is supplied domestically.
Edwin Devakumar, group vice president of Dangote Industries Limited, said some Nigerian cargoes had been more expensive than comparable imported supplies, without providing specific prices.
Among the crude grades imported by Dangote is U.S. WTI Midland, which has generally traded above Nigeria's Bonny Light in 2026, according to S& P Global Energy Platts data.
Government Seeks To Improve Local Supply
Nigerian authorities are working on measures to increase the flow of locally produced crude to domestic refineries.
Oritsemeyiwa Eyesan, chief executive of the Nigerian Upstream Petroleum Regulatory Commission, said authorities were exploring a crude swap system that could match local producers with refiners, potentially reducing delivery times and logistical costs.
Dangote’s location on Nigeria’s coast also provides an advantage, allowing the refinery to bring in crude from international markets when domestic supplies are insufficient.
“The main risk is the cost of importing these barrels, ” said Alan Gelder, an analyst at Wood Mackenzie.
As Dangote approaches its expected IPO, investors are likely to focus on whether the refinery can maintain strong refining margins while securing enough competitively priced crude to support its planned expansion.
The refinery’s ability to diversify crude supplies could reduce dependence on Nigeria’s domestic oil market, but international sourcing could also expose earnings to higher transportation costs, global crude prices and foreign-exchange movements.
With plans to significantly increase production, feedstock security and cost efficiency could become central to Dangote Refinery’s valuation once it enters public markets.
Source: Reuters
Reporting: Isaac Anyaogu, Ahmad Ghaddar and Stephanie Kelly
Editing: Alex Lawler and Barbara Lewis