Dangote Refinery Set to Import 24 Million Barrel of Crude Oil from US

The Lagos-based Dangote Refinery has concluded plans to secure approximately 24 million barrels of U.S. crude oil over the coming year, Bloomberg reports.

Beginning in July, the refinery, founded by Africa’s richest man, Aliko Dangote, will procure two million barrels monthly of the West Texas Intermediate Midland crude.

Positioning on the Global Stage

This significant move is not just about increasing capacity but also signals Dangote Refinery’s looming impact on the global oil landscape.

Set to be the largest refinery in Africa upon completion, the facility’s engagement with U.S. crude highlights the competitive dynamics between Nigerian and American oil supplies, shedding light on the broader implications for Nigeria’s oil industry.

The Challenge of Local Supply

Despite Nigeria’s stature as a formidable oil producer, it continues to grapple with fulfilling its OPEC quotas and satisfying domestic demand. This has compelled the Dangote Refinery to lean heavily on imports, particularly from the U.S.

According to the report, one-third of the refinery’s feedstock is sourced from the United States, a trend driven by the comparative cost advantages of foreign oil.

Technological Upgrades and Market Impact

The Dangote refinery is not only expanding its physical capacity but also enhancing its technological edge. FGE energy analyst Ronan Hodgson notes the upcoming activation of units designed to improve diesel quality, indicating the refinery’s operational ramp-up.

“The refinery is already having a sizable impact on product markets, even running in its most stripped-back form at minimum rates,” Hodgson remarked.

Policy Shifts Could Alter Sourcing

Changes in regulatory frameworks could also reshape the refinery’s sourcing strategy. The Nigeria Upstream Petroleum Regulatory Commission (NUPRC) has recently instituted a policy requiring oil companies to supply domestically before exporting.

This initiative aims to facilitate crude acquisition for local refineries through a structured agreement process, potentially benefiting Dangote by reducing its reliance on imported crude.

Dangote Refinery Timeline for Product Roll Out

Contrary to initial reports that the refinery would start supplying petrol to Nigerian markets in May 2024, it’s projected that Dangote refinery will commence petrol distribution in the fourth quarter, according to insights from Standard and Poor’s Global Commodities

Meanwhile, the refinery has already launched the sale of diesel and aviation jet fuel domestically at competitive prices, further embedding its footprint in the local market.

The Dangote Refinery’s strategy to integrate more U.S. crude into its operations not only underscores its ambitious expansion but also reflects its pivotal role in shaping both regional and global energy markets.