Nigeria’s mega Dangote refinery set to import crude oil from the USin the coming months. The Dangote Petroleum Refinery is to import crude oil as part of its efforts to commence production of refined products at its $20 billion facility. This action by Africa's biggest refinery highlights the growing competitiveness of American crude on the global market.
Additionally, the refinery is anticipating the arrival of two million barrels of crude oil from Trafigura Group in February. Situated in the Dangote Industries Free Zone in Ibeju-Lekki, Lagos State, the Dangote Petroleum Refinery and Petrochemical Project, a subsidiary of Dangote Industries Limited, boasts a capacity of 650,000 barrels per day.
The refinery is an industrial complex dedicated to converting crude oil into a range of valuable petroleum products, including diesel, gasoline, jet fuel, and kerosene. To date, the facility has taken delivery of six million barrels of crude oil through its two Single Point Mooring (SPM) systems positioned 25 kilometers offshore.
The initial crude shipment occurred on December 12, 2023, with the sixth cargo arriving on January 8, 2024. These six million barrels were sourced from the Nigerian National Petroleum Company Limited and other international oil firms operating within Nigeria.
Dangote refinery is set to receive a shipment of two million barrels of WTI Midland from the Trafigura Group, scheduled for delivery at the end of February. Traders familiar with the situation revealed this development, noting that it marks the refinery's inaugural purchase of non-Nigerian crude.
Trafigura, a multinational commodity trading firm, is headquartered in Singapore and maintains significant operations in key centers such as Geneva, Houston, Montevideo, and Mumbai. The company is actively involved in the oil and petroleum products market.
As a globally focused company, Trafigura primarily engages in trading base metals, energy (including oil), and various other commodities like minerals and metals. Notably, their involvement in US oil underscores their activities in the international market.
The surge in US oil production over the last decade has significantly influenced global dynamics, extending its impact to regions like Asia. Nigeria, heavily reliant on petroleum exports, feels the effects of these transatlantic shipments.
Given the refinery's capability to process crude oil from diverse sources, the decision to import from the US aligns with its operational flexibility. According to Devakumar Edwin, Executive Director of Dangote Group, the Dangote Petroleum Refinery was in the process of importing crude oil and awaited its first shipment at that time.
In an interview with S&P Global Commodity Insights, Edwin disclosed that despite NNPCL's role in trading Nigeria's crude oil, it had allocated its crude to other recipients. While he didn't specify the recipients, NNPCL had previously announced a $3 billion crude oil-for-loan arrangement with the African Export-Import Bank in August. This deal allowed NNPCL to pledge future oil production as loan repayment.
Conclusion
Regarding the Dangote refinery's crude importation, Edwin clarified that it was a temporary measure, as they anticipated receiving supply from NNPCL starting in November. He also projected that the refinery would commence production of up to 370,000 barrels per day of crude, yielding Automotive Gas Oil and jet fuel by October 2023. He also mentioned plans to produce petrol by November 30, 2023. However, these projections have yet to materialize, as the facility has not yet begun refining operations.