Africa’s largest refinery’s move to import crude from the US is a sign of just how competitive American barrels have become in the global market, Bloomberg reported on Monday.
The multi-billion dollar refinery is also reportedly expecting two million barrels of crude oil from Trafigura Group in February.
The Dangote Petroleum Refinery and Petrochemical Project, a subsidiary of Dangote Industries Limited, is a 650,000 barrels per day crude oil refinery, located in Dangote Industries Free Zone, Ibeju-Lekki, Lagos State.
The refinery is an industrial plant that transforms crude oil into various usable petroleum products such as diesel, gasoline, jet fuel and kerosene.
The facility has, so far, received six million barrels of crude oil at its two SPMs located 25km from the shore. The first crude delivery was done on December 12, 2023, and the 6th cargo was delivered on January 8, 2024.
The six million barrels were supplied by the Nigerian National Petroleum Company Limited and other international oil companies that operate in Nigeria.
On Monday, Bloomberg also reported that Trafigura Group sold two million barrels of WTI Midland to Dangote refinery for end-February delivery.
It said this was disclosed by traders with knowledge of the matter. This is the first time that the giant refinery has purchased non-Nigerian crude, traders said.
Trafigura is a multinational commodity trading company headquartered in Singapore, with major hubs in various locations including Geneva, Houston, Montevideo and Mumbai. The group participates in the oil and petroleum products market.
They primarily trade in base metals and energy, including oil, and also other commodities like minerals and metals. They have activities involving US oil as a globally focused company.
It should be noted that the growth in US oil supply over the past decade has reshaped the global market, extending its influence to regions like Asia. Nigeria, whose economy heavily relies on petroleum exports, is particularly impacted by these transatlantic deliveries.
The facility can refine crude oil grades from various countries, hence the move to import crude from the US.
Recall that on September 20, 2023, The PUNCH reported that the Dangote Petroleum Refinery was importing crude oil and expected its first cargo at the time, according to the Executive Director, Dangote Group, Devakumar Edwin.
The report stated that though NNPCL trades crude oil on behalf of Nigeria, in an interview with S&P Global Commodity Insights at the time, Edwin revealed that the NNPCL had committed its crude to other entities.
The Dangote refinery boss did not disclose the other entities receiving the oil company’s crude, but the NNPCL had earlier disclosed in August that it had entered into a $3bn crude oil-for-loan deal with African Export-Import Bank.
The deal allowed the company to pledge future oil production to the bank as repayments for the loan.
Also, Edwin had pointed out at the time that the importation of crude by the Dangote refinery was temporary, as the firm would receive supply from NNPCL from November.
Edwin went ahead to state that the firm would begin the production of up to 370,000 barrels per day of crude that would give rise to Automotive Gas Oil, popularly called diesel, and jet fuel in October 2023.
For petrol, the Dangote Group’s boss said the plant would produce it by November 30, 2023. These projections, however, did not materialise, as the facility has yet to pump out refined products up till this time.
