The Dangote Petroleum Refinery is increasingly sourcing crude oil from Nigeria, reducing its reliance on imports from the United States, according to a report by Bloomberg. The report highlighted that the 650,000-barrel-per-day refinery plans to obtain more than 80% of its feedstock from domestic sources in the third quarter of 2024, up from less than 75% in the previous quarter. This shift is based on tanker-tracking data and insights from industry traders.
In recent developments, oil prices experienced pressure after it was reported that the refinery intended to resell some of the US crude barrels it had previously purchased. This action underscores the influential role Dangote’s refinery plays in the Atlantic basin petroleum markets.
The refinery’s decision to reduce overseas crude purchases could result in more US export barrels seeking buyers elsewhere. This trend may accelerate as the Federal Government plans to begin selling crude oil in local currency to Dangote starting October 1. While it remains unclear how much supply will be traded under this arrangement, if the 450,000 barrels allocated for local consumption are utilized, Dangote may no longer need to import crude from overseas sources.
Since December, the $20 billion Dangote refinery in Lekki, Lagos, has processed over 56 million barrels of crude, with 78% of this supply being locally sourced. The refinery received six cargoes of crude directly from the Nigerian National Petroleum Company Limited (NNPCL) for September, with each cargo typically holding around one million barrels. Additionally, the refinery is expected to receive two more shipments from Nigeria and two million barrels of WTI Midland crude in September, according to tanker-tracking data.
The refinery has processed an average of nearly 10 million barrels of crude per month over the past six months. Initially, there were expectations that inflows of American feedstock would increase significantly during the summer. However, some of the US barrels purchased for August and September were resold, a claim that the refinery refuted in late July. Additionally, two tenders for purchasing an additional 6 million barrels of American crude for September were canceled, according to traders.
These changes may reduce the number of Nigerian crude barrels available for sale in Europe and Asia. Meanwhile, Dangote’s petrol is anticipated to enter the market by September.
