Dangote, XCMG Sign $400m Deal to Expand Refinery

Dangote Group has signed a $400 million equipment agreement with China’s Xuzhou Construction Machinery Group as part of plans to expand the Dangote Petroleum Refinery from its current operating capacity toward 1.4 million barrels per day.

The agreement is expected to support ongoing expansion works at the refinery, which is located in the Lekki Free Zone in Lagos State.

The equipment deal was announced as the refinery continued to ramp up production and expand crude sourcing beyond Nigeria, including the purchase of its first crude cargoes from the United Arab Emirates.

The Dangote Petroleum Refinery was built at a cost of about $20 billion and began operations in 2024. It has a nameplate capacity of 650,000 barrels per day, making it the largest single train refinery in the world.

In June 2026, the refinery processed 700,000 barrels per day during a performance test, exceeding its official nameplate capacity.

Dangote Industries said the new equipment agreement with Xuzhou Construction Machinery Group will allow the company to acquire additional heavy duty machinery needed for projects across refining, petrochemicals, agriculture, and infrastructure.

The equipment will support the wider expansion plan of the refinery and associated industrial projects.

As part of the expansion programme, Dangote Group is targeting an increase in refinery capacity to 1.4 million barrels per day. The company has said the expansion is expected to be completed within about three years.

The plan would effectively double the refinery’s processing capacity and place the plant among the largest refining operations in the world.

The expansion is also expected to increase the crude oil requirement of the refinery at a time when local crude supply has remained a challenge for Nigerian refiners.

Dangote Refinery has increasingly sourced crude oil from outside Nigeria to support operations. The refinery has already used crude grades from the United States, Angola, Ghana, Libya, and Guyana.

The latest crude sourcing move involves two cargoes from the United Arab Emirates. Reports said the purchases mark the first time the refinery has bought crude from any Middle Eastern supplier.

The refinery was originally designed mainly to process Nigeria’s light sweet crude. However, as operations have increased, the plant has broadened its crude feedstock sources.

S&P Global reported that the refinery’s purchase of UAE crude followed the restoration of confidence in shipping through the Strait of Hormuz after an interim agreement involving the United States and Iran.

The UAE crude purchases also came as Nigerian domestic crude supply remained tight.

An agreement between the Nigerian National Petroleum Company Limited and Dangote Refinery had been designed to guarantee the supply of about 13 to 15 Nigerian crude cargoes monthly in naira.

The arrangement was intended to support local refining and reduce foreign exchange pressure on the refinery.

However, reports said the deal has faced problems because of crude availability constraints and operational issues at export terminals.

Reuters reported in May 2026 that Nigerian crude producers supplied local refineries with less than half of the volumes allocated under the country’s Domestic Crude Supply Obligation in the first quarter of 2026.

According to regulator data cited by Reuters, 61.9 million barrels were allocated to domestic refineries during the quarter, while actual supply stood at 28.5 million barrels.

The report said the actual supply represented about 46 percent of allocated volumes.

The Nigerian Upstream Petroleum Regulatory Commission attributed the shortfall mainly to pricing differences between crude producers and domestic refiners.

The regulator said transactions continue to operate on a willing buyer, willing seller basis.

The supply shortfall has affected domestic refining operations, including Dangote Refinery, which has repeatedly had to secure crude from international markets.

The refinery’s Chief Executive Officer, David Bird, previously said crude supply constraints in Nigeria had pushed the company to look for additional crude sources outside the country.

Bird also said the refinery planned to increase the share of heavier crude grades in its feedstock mix.

He said the company would be involved in crude blending as it expands refining capacity.

According to S&P Global, the refinery wants to increase the number of crude grades it can process. The company is working toward a merchant refinery model, where it can buy different crude types from global suppliers and process them based on price, availability, and product demand.

Data cited by S&P Global showed that in 2025, about 70 percent of Dangote Refinery’s crude imports came from Nigeria, while 24 percent came from the United States.

In 2026, the refinery has also imported cargoes from Angola, Ghana, Libya, and Guyana.

The addition of UAE crude expands the refinery’s supply options and gives it access to Middle Eastern crude grades such as Murban, Das Blend, Umm Lulu, and Upper Zakum.

The expansion to 1.4 million barrels per day would increase the refinery’s crude requirement sharply.

S&P Global reported that at 1.4 million barrels per day, the refinery would be able to process about 80 percent of Nigeria’s recent crude oil output in a single day.

This means the refinery’s expansion would require either a major improvement in local crude supply or continued access to international crude markets.

The refinery has already become a major supplier of refined petroleum products.

Reuters reported that Dangote Refinery has supplied products to the Nigerian domestic market and exported to African countries, Europe, the United States, and Saudi Arabia.

The refinery’s exports rose to 353,000 barrels per day in April 2026 from 168,000 barrels per day in February, according to Kpler data cited by Reuters.

The refinery also produced a large surplus of jet fuel. Its Chief Executive Officer said in June 2026 that the refinery could supply jet fuel to global markets because African demand was lower than available output.

The Dangote Group’s expansion plan also covers other products outside petrol, diesel, and aviation fuel.

Reuters reported that the equipment deal with Xuzhou Construction Machinery Group would support the expansion of polypropylene production from 900,000 tonnes per year to 2.4 million tonnes per year.

The group also plans to increase urea production in Nigeria to 9 million tonnes per year.

The programme also includes plans to raise linear alkyl benzene output to 400,000 tonnes annually and expand base oil capacity.

Dangote Group said the equipment agreement forms part of its wider plan to grow into a $100 billion enterprise by 2030.

The company said the equipment would strengthen execution across its refinery, petrochemical, agriculture, and infrastructure projects.