Nigeria’s Dangote refinery is negotiating with Libya and Angola to secure crude oil supplies for its 650,000 barrels per day (bpd) plant, Reuters reported on Sunday, July 21, 2024. This move aims to mitigate domestic supply issues that have plagued the refinery since it commenced operations in January 2024.
Built by Aliko Dangote, Africa’s wealthiest individual, the $20 billion refinery on the outskirts of Lagos is the largest on the continent. It was designed to eliminate Nigeria’s reliance on imported fuels and address insufficient refining capacity.
However, despite being Africa’s largest oil producer, Nigeria faces significant challenges such as oil theft, pipeline vandalism, and low investment, which have hampered the refinery’s ability to secure adequate crude supplies domestically.
Note that between July 6 and 12, 2024, 221 recorded crude oil theft incidents occurred in the country, according to data provided by the Nigerian National Petroleum Company Limited (NNPCL).
The Dangote refinery has resorted to importing crude oil from distant sources, including Brazil and the United States. “We are talking to Libya about importing crude,” Devakumar Edwin, a senior executive at the Dangote refinery, told Reuters on Saturday. We will also engage with Angola and other African countries.”
While Edwin declined to provide specific details about these negotiations, he mentioned that international traders and oil companies are among the primary purchasers of Dangote’s gasoil, much of which is being exported.
“The biggest off-takers are the two major traders, Trafigura and Vitol, as well as BP and, to some extent, TotalEnergies. However, all of them are currently taking it offshore,” Edwin said.
According to Reuters, traders and shipping data indicate that Dangote refinery is increasing its gasoil exports to West Africa, thereby capturing market share from European refiners. Edwin noted that the refinery’s oil trading arm is operational, with staff stationed in London and Lagos to manage supplies and sales.
The refinery’s efforts have not been without challenges. Nigeria’s upstream regulator, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), has contested the sulphur content in Dangote’s gasoil, stating it exceeded the permissible limit of 200 parts per million (ppm).
Aliko Dangote has refuted these claims, explaining that while the sulphur levels were initially high, they have since decreased to 88 ppm and are expected to reach 10 ppm by early August as production scales up.
As the Dangote refinery navigates these hurdles, the company believes that securing reliable crude supplies from Libya and Angola could prove pivotal in transforming Nigeria’s energy landscape and reducing the nation’s dependence on imported fuels.