Dangote Refinery Imports Additional 11m Barrels Of US Crude Oil
Dangote Petroleum Refinery and Petrochemicals has issued a tender for an additional 11 million barrels of US crude oil over the next six months due to Nigerian crude oil producers’ inability to meet its feedstock requirements.
The 650,000 barrels per day refinery has already received nine million barrels of West Texas Intermediate crude from the US since the beginning of 2024 to offset unreliable domestic supplies. The new tender, closing on July 21, aims to procure two million barrels per month of WTI Midland crude for the Company for the next six months starting in August.
In a tender reported by Bloomberg, Dangote Refinery purchased five million barrels of West Texas Intermediate (WTI) Midland crude for delivery in the upcoming months of August and September. Additionally, the company initiated a tender process to acquire an additional six million barrels of American crude for September.
This reliance on US crude highlights Nigeria’s challenges in meeting its own refining needs, attributed to issues such as crude theft, aging infrastructure, and underinvestment, which have led to a decline in production. In April, Nigeria’s daily output was only 1.45 million barrels, well below its capacity of 2.6 million barrels per day. The country recorded an estimated 30 million barrels underproduction in the first four months of 2024.
Dangote Refinery, crucial to Nigeria’s goal of becoming a net exporter of petroleum products, has found it necessary to import crude to sustain operations amidst insufficient domestic supply.
President of Dangote Group, Aliko Dangote, stated during the Africa CEO Forum 2024 that the refinery will need to continue importing crude as production scales up and alternative supply contracts are sought. ‘It also makes economic sense for us to tender for crude. If we could source 100 percent Nigerian crude, then fine, but we can’t wait,’ said Dangote.
Speaking on the challenge with sourcing crude locally, Dangote added that, “there is a bit of a problem for us to source the entire volume of crude that we’re looking for domestically because we need different types and mixes. Unless crude production improves, which we pray and hope for, we need to go elsewhere.”
He said, “the refinery took in more than 41 million barrels of feedstock in the first half of the year as it completed test runs and gradually increased processing rates, tanker-tracking data show. Of that, about a quarter has been American supply.”
According to CAS, the refinery took delivery of 11 WTI cargoes, or nine million barrels, between February and May, contrasting with around 18 million barrels of Nigerian crude deliveries.
The Nigerian National Petroleum Company (NNPC) has struggled to meet its 300,000 barrels per day obligation to the refinery due to operational constraints.
International financial analytics corporation, S&P Global recently described the Dangote Petroleum Refinery and Petrochemicals company as capable of resolving Nigeria’s foreign exchange (forex) issue and its huge pressure on the local Naira currency, while also catalysing the country’s economic development.
Currently operating at 350,000 barrels per day capacity, vice president of Oil and Gas at Dangote Industries Limited (DIL), Devakumar Edwin, recently disclosed that the refinery would scale up to at least 500,000 barrels per day capacity by July/August, commencing the refining of petrol and ultra-low sulphur diesel.
