Dangote Refinery Set To Buy 24m Barrels Of Crude From US

Elitsa Georgieva, Executive Director at Citac, an energy consultancy specializing in the African downstream sector, said: “The supply of Nigerian crude is insufficient or unavailable and sometimes unreliable

However,the plans the call for US oil 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.

According to an alleged information by Bloomberg revealed that the $20 billion refinery has issued a term tender for the purchase of 2 million barrels a month of West Texas Intermediate Midland (WTI) crude for 12 months starting in July, which amounts to 24 million barrels of crude in one year.

Also the  highlights indicated on  how influential the refinery will be in global crude and fuel trading.

He added that the WTI, on the other hand, is available, has reliable supply, and is competitively priced.

Elitsa Georgieva stated that ” Buying different feed stocks also provides flexibility and optionality for the refinery, so the tender makes economic sense for Dangote.”

Nigeria has not been able to meet its Organization of Petroleum Exporting Countries (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 country have all contributed to declining production.

To ensure enough local supply to the 650,000 barrel-a-day refinery, Nigeria’s upstream regulator, the Nigeria Upstream Petroleum Regulatory Commission (NUPRC), released new draft rules last month that will compel its oil producers to sell crude to domestic refineries.

NUPRC mandated all oil companies in Nigeria to supply crude to domestic refineries that were unable to procure it locally.

Producers are allowed to export crude only after meeting these domestic supply obligations.

Under the new rules, NUPRC will act as an intermediary between local refiners and producers when agreements on crude supply are not reached, facilitating a sales purchase agreement using a willing-buyer, willing-seller model.

This new policy could benefit the Dangote refinery by enabling it to procure crude oil from local suppliers rather than depending on imports.

The plant, which is currently running at about half capacity, is taking advantage of cheaper US oil imports for as much as a third of its feedstock. Since the start of this year, it has received at least one supertanker carrying about 2 million barrels of WTI Midland each month.

An official at Dangote declined to comment on the report, Bloomberg stated.