June 19, 2024

Dangote Refinery orders 24m barrels of US crude oil


Ilenre Irele

Dangote’s mega refinery in Lekki near reportedly looking to purchase millions of barrels of US crude over the next twelve months period, as it ricochets up processing rates, a signature sign of the difficulties that Africa’s largest producer faces in lifting its own oil output.

The plant issued a term tender for the buying of 2 million barrels a month of West Texas Intermediate (WTI) Midland crude for 12 months beginning in July, according to a document seen by Bloomberg. The tender closes on May 21, it said.

The call for US oil highlights how influential the plant will be in global crude and fuel trading. It also reflects Nigeria’s struggle to lift its own crude production, which remains well below theoretical capacity, as well as Dangote’s willingness to tap cheaper supplies than it can find at home.“Supply of Nigerian crude is insufficient or unavailable and sometimes unreliable,” said Elitsa Georgieva, Executive Director at Citac, an energy consultancy specialising in the African downstream sector.

“WTI on the other hand, is available, with reliable supply and competitively priced,” Georgieva added.Buying different feedstock also provides flexibility and optionality for the refinery, so the tender makes economic sense for Dangote, Georgieva said. Nigeria has been unable to meet its OPEC+ quota for at least a year.The nation pumped about 1.45 million barrels a day of crude and liquids in April, still far below its estimated production capacity of 2.6 million barrels a day. Crude theft, aging oil pipelines, low investment, and divestments from oil majors operating in the West African nation have all contributed to declining production.

In spite of various assurances by the federal government and the Nigerian National Petroleum Company Limited (NNPC) of meeting the country’s Organisation of Petroleum Exporting Countries (OPEC) quota, Nigeria recorded an estimated 30 million barrels underproduction in the first four months of 2024.

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