Nigeria’s Energy Market Shaken by Dangote Refinery’s Three-Day Outage: Exploring the Impact on Gas Prices and Oil Production

Nigeria’s energy market is reeling from the ripple effects of a three-day strike at the Dangote Refinery that halted operations across key oil and gas facilities, disrupted productionand pushed up fuel and cooking gas prices nationwide.

From production terminals to household kitchens, the refinery’s operations ripple through every corner of the economy, highlighting both its transformative potential and the country’s vulnerability to shocks within its domestic energy infrastructure.

The industrial action triggered by mass layoffs at Africa’s largest refinery complex has exposed Nigeria’s growing vulnerability to disruptions within its own energy network, an irony for a facility once hailed as the answer to the country’s chronic fuel shortages and import dependence.

What began as a labour dispute at the Dangote Refinery has now rippled through every layer of national life, from oil terminals and filling stations to household kitchens, further revealing how the 650,000-barrel-per-day plant has become central to Nigeria’s economic stability and energy security.

Refinery disruptions threaten energy security – Nigerian government

Nigeria’s Vice President, Kashim Shettima, in a recent broadcast, had warned against mounting challenges facing the Dangote Refinery, saying that any disruption to its operations could undermine the country’s energy security and reverse gains made in reducing fuel importation.

Shettima emphasized that the refinery is a “strategic national asset” whose success is vital not only for Nigeria’s economic stability but also for West Africa’s growing dependence on its refined fuel exports.

He cautioned that ongoing labour disputes, policy inconsistencies, or sabotage could jeopardize investor confidence and stall the nation’s broader industrialization drive.

Oil output dips as strike disrupts production

Nigeria’s crude oil production took a significant hit following the unrest, with the Nigerian National Petroleum Company Limited (NNPCL) confirming a loss of over 600,000 barrels in just three days.

The strike, which began after reports that Dangote Industries had dismissed more than 800 workers, quickly spread beyond the refinery, paralysing operations at several critical energy facilities.

According to NNPCL Chief Executive Officer Bayo Ojulari, the strike by members of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) made “optimum production almost impossible” as technical staff across refineries, terminals, and upstream facilities joined the protest.

“I think it was unfortunate that the Dangote and PENGASSAN issue led to a strike, and whenever there is a strike and critical staff manning critical facilities are not available, optimum production is almost impossible,” Ojulari said after meeting with President Bola Tinubu in Lagos.

“In this particular case, we actually lost significant production of over 200,000 barrels per day that was deferred.”

The loss comes at a delicate time for Nigeria, which has been working to raise output levels after years of underperformance relative to its OPEC quota.

Analysts warn that further disruptions could erode investor confidence and complicate the government’s efforts to attract fresh capital into the oil and gas sector.

Cooking gas prices soar amid supply disruption

The strike’s impact extended beyond crude production to household energy costs. Across major Nigerian cities, the price of liquefied petroleum gas (LPG) commonly known as cooking gas, doubled within a week, leaving many families struggling to refill their cylinders.

NNPCL’s Ojulari attributed the spike to a temporary halt in loading and distribution activities during the strike.

“The increase you saw was relatively artificial because for the period of the strike, movements and loading were delayed by about two, three days,” he said. “And because of that, you see that impact. As things return back to normal, it takes some time for distribution to be fully restored.”

Bassey Essien, Executive Secretary of the Nigerian Association of Liquefied Petroleum Gas Marketers told The Electricity Hub that the shortage was directly linked to the industrial action. “Dangote Petroleum Refinery, Nigeria’s most prominent local supplier, could not distribute during the strike,” he said.

In response, Aliko Dangote confirmed that the refinery currently produces around 2,000 tonnes of LPG daily and pledged to increase supply directly to households if distributors fail to reduce costs.

Fuel prices climb as queues return

The strike also reignited tension at petrol stations nationwide, with the NNPCL raising the pump price of Premium Motor Spirit (PMS) from ₦890 to ₦905 per litre at its retail outlets, a ₦15 increase, or roughly 1.7 percent.

The adjustment coincided with reports of light queues resurfacing in parts of Abuja, particularly around Wuse Zones 4 and 6.

“It is due to PENGASSAN’s strike disruption. However, our members are still selling between ₦885 and ₦895 per litre,” Maigandi explained.

The refinery’s brief shutdown, though now resolved, has reinforced broader concerns about Nigeria’s overdependence on a single facility to drive its domestic refining ambitions.

Analysts say while the Dangote Refinery remains a symbol of industrial ambition, its growing influence also exposes Nigeria’s energy economy to new systemic risks where a labour dispute can ripple through the entire supply chain, from upstream production to household kitchens.

How did the Dangote Refinery outage specifically impact the availability of gasoline in major Nigerian cities?

The Outage: A timeline and Initial Response

Between October 5th and October 7th, 2025, Nigeria’s 650,000 barrels per day (bpd) Dangote Refinery experienced an unscheduled three-day shutdown. Initial reports attributed the outage to technical issues related to a newly commissioned unit responsible for gasoline production. while Dangote Industries Limited (DIL) swiftly moved to rectify the problem, the disruption sent ripples through Nigeria’s already volatile energy market.The immediate impact was felt across the downstream sector, with concerns escalating regarding potential fuel shortages and price hikes. This event underscores the fragility of Nigeria’s refining capacity and it’s dependence on imported petroleum products,despite the refinery’s promise of energy independence.

Impact on Domestic Gasoline (Petrol) Prices

the temporary halt in gasoline production at Dangote refinery immediately triggered anxieties about a return to higher pump prices. Before the outage,Nigeria had seen a period of relative price stability,largely attributed to the refinery’s increased output.

* Supply Disruption: The three-day shutdown reduced the available gasoline supply within the country,creating a localized scarcity in major cities like Lagos,Abuja,and Port Harcourt.

* Increased Import reliance: With domestic production curtailed, Nigeria was forced to rely more heavily on gasoline imports to meet demand. This increased demand for foreign exchange, putting downward pressure on the Naira and further contributing to potential price increases.

* Price Speculation: Fuel marketers, anticipating further supply constraints, began to engage in speculative pricing, leading to reports of unofficial price increases at some filling stations. The Petroleum Pricing Regulatory Agency (PPRA) issued statements urging marketers to maintain existing price levels, but enforcement proved challenging.

* Potential for Hoarding: Concerns about scarcity also fueled fears of hoarding by some retailers, exacerbating the supply issues.

Effects on Crude Oil Production & Export

While the Dangote Refinery’s outage primarily impacted gasoline supply, it also had indirect consequences for Nigeria’s crude oil production and export landscape.

* Reduced Crude Intake: the refinery’s shutdown meant a temporary reduction in its crude oil intake, impacting the demand for Nigerian crude. While not a significant drop in overall national production, it added to existing pressures on crude sales.

* Impact on Crude Grades: Dangote Refinery is designed to process a variety of crude oil grades, including Nigeria’s Bonny Light and Qua Iboe. The outage temporarily altered the demand dynamics for these specific crude types.

* Export Diversification Challenges: Nigeria has been actively seeking to diversify its crude oil export markets.The refinery’s operational hiccups highlight the importance of a stable domestic refining sector to reduce reliance on export revenue and create value-added products.

* NNPC’s Role: The Nigerian National Petroleum Corporation (NNPC) Limited played a crucial role in mitigating the impact of the outage by increasing gasoline imports and ensuring adequate supply to distribution channels.

The Broader Implications for Nigeria’s Energy Security

The Dangote Refinery outage serves as a stark reminder of the vulnerabilities within Nigeria’s energy infrastructure.

* refining Capacity Concerns: Despite being Africa’s largest single-train refinery, the incident underscores the need for continued investment in refining capacity and maintenance to ensure long-term energy security.

* Infrastructure Investment: The event highlights the critical importance of robust infrastructure – including pipelines, storage facilities, and distribution networks – to support a reliable energy supply.

* Diversification of Energy Sources: Nigeria’s over-reliance on crude oil revenue and gasoline imports makes it susceptible to price shocks and supply disruptions. Diversifying into renewable energy sources, such as solar and wind power, is crucial for long-term sustainability.

* Regulatory Framework: A clear and effective regulatory framework is essential to attract investment in the energy sector and ensure fair competition.

Historical Context: Nigeria’s Refining Challenges

Nigeria has struggled for decades with inadequate refining capacity. Prior to the commissioning of the Dangote Refinery, the country relied heavily on importing refined petroleum products, despite being a major crude oil producer.

* Port Harcourt Refining Company (PHRC): The PHRC, one of Nigeria’s oldest refineries, has consistently operated below its installed capacity due to years of neglect and underinvestment.

* Warri Refining and Petrochemical Company (WRPC): Similar to the PHRC, the WRPC has faced operational challenges, contributing to the country’s refining deficit.

* Kaduna Refining and Petrochemical Company (KRPC): The KRPC has also struggled with consistent performance, further exacerbating the reliance on imports.

* Previous Import Subsidies: for years, Nigeria operated a costly fuel subsidy scheme to keep gasoline prices artificially low. This scheme was eventually removed in 2023, leading to a significant increase in pump prices but also freeing up goverment resources.

Looking Ahead: Mitigating Future Risks

To prevent similar disruptions and enhance energy security, Nigeria needs to prioritize the following:

* preventative Maintenance: Implementing a rigorous preventative maintenance schedule for the Dangote Refinery and other existing refineries is crucial.

* Investment in Redundancy: Building redundancy into the refining system – through additional refining capacity or strategic