Dangote refinery cuts back on crude oil imports from the US

According to a Bloomberg report, the Dangote Petroleum Refinery is scaling back its importation of crude oil from the United States and increasing its use of Nigerian crude. For the third quarter, the refinery plans to source over 80% of its feedstock from domestic supplies, up from less than 75% in the previous quarter, based on tanker-tracking data and trader information.

The report highlighted that last month’s oil price pressures were partly due to the refinery’s intention to re-sell some US barrels it had previously bought, emphasizing Dangote’s significant role in the Atlantic basin petroleum markets.

This reduction in overseas crude purchases could mean more US barrels competing for other buyers. The shift may accelerate in the coming months, particularly as the Federal Government plans to sell crude in local currency to Dangote starting October 1. The exact volume of this local currency trade is uncertain, but if the 450,000 barrels designated for local consumption are used up, Dangote might need minimal overseas crude.

Since December, the $20 billion Dangote refinery in Lekki, Lagos, has processed over 56 million barrels of crude, with 78% coming from local sources. It has already received six cargoes from the Nigerian National Petroleum Company Limited for the upcoming month. Additionally, two shipments from Nigeria and two million barrels of WTI Midland are expected in September.

The refinery was anticipated to increase its American feedstock intake significantly this summer, but some US barrels slated for this month and next have been resold, a claim the refinery disputed in late July. It also canceled two tenders for purchasing an additional 6 million barrels of American crude for September.

These changes might reduce the availability of Nigerian barrels in European and Asian markets, with Dangote’s petrol expected to enter the market by September.