Dangote Refinery Taps 24M Barrels US Oil to Meet Processing Needs

Dangote Refinery is set to purchase at least 24 million barrels of US crude over the next year as it ramps up its processing capabilities.

According to a Bloomberg report, the $20 billion refinery has issued a term tender to buy 2 million barrels per month of West Texas Intermediate Midland (WTI) crude for 12 months starting in July, totaling 24 million barrels.

This move to source US oil highlights Nigeria’s challenges in boosting its own crude production, which remains below theoretical capacity, and Dangote’s strategy to secure cheaper supplies.

It underscores the refinery’s potential influence in global crude and fuel markets.

Elitsa Georgieva, Executive Director at Citac, an energy consultancy focusing on the African downstream sector, explained, “Supply of Nigerian crude is insufficient or unavailable and sometimes unreliable.

WTI, on the other hand, is available, with reliable supply and competitively priced. Buying different feedstocks also provides flexibility and optionality for the refinery, so the tender makes economic sense for Dangote.”

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Nigeria has struggled to meet its Organization of Petroleum Exporting Countries (OPEC) quota for over a year, producing about 1.45 million barrels of crude and liquids per day in April, significantly below its estimated capacity of 2.6 million barrels per day.

Issues such as crude theft, aging oil pipelines, low investment, and divestments from major oil companies have contributed to the declining production.

To ensure sufficient local supply for the 650,000 barrel-per-day refinery, Nigeria’s upstream regulator, the Nigeria Upstream Petroleum Regulatory Commission (NUPRC), released new draft rules mandating oil producers to sell crude to domestic refineries before exporting.

The NUPRC will facilitate agreements between local refiners and producers using a willing-buyer, willing-seller model when necessary.

This policy could benefit Dangote Refinery by enabling it to procure crude oil from local suppliers rather than relying on imports. Currently operating at about half capacity, the refinery is importing cheaper US oil for up to a third of its feedstock.

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Since the beginning of the 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 noted.