Dangote refinery is preparing to import crude from the US in the forthcoming months, signalling the increasing competitiveness of American barrels in the global market.
This is according to reports from Bloomberg.
Traders’ familiar with the matter disclosed that Trafigura Group has sold 2 million barrels of WTI Midland to the Dangote refinery for delivery by the end of February. This marks the first time the refinery is buying non-Nigerian crude.
The exponential growth in US oil supply over the past decade has reshaped the global market, extending its influence to regions like Asia. Nigeria, whose economy heavily relies on petroleum exports, is particularly impacted by these transatlantic deliveries.
The new 650,000 barrel-a-day oil refinery commenced operations earlier this month. Initially targeting a processing rate of 350,000 barrels per day, the refinery aims to gradually escalate production towards its full capacity.
While the refinery primarily sources domestic crude through a supply agreement with the trading arm of the state-owned NNPCL, it recently received its first shipment of Nigeria’s Agbami crude, facilitated by a trading unit of Shell. Subsequent deliveries included Nigeria’s Amenam, Bonny Light, and CJ Blend streams.
In addition to handling domestic feedstock, the recently inaugurated mega-facility is capable of processing various African crudes, along with supplies from distant sources such as the US and Saudi Arabia, as disclosed by the Dangote Group earlier this month.
Nigeria has been battling shortage in crude oil production in the past few years occasioned by rising incidents of crude oil theft, divestment from oil majors and insecurity across the Niger Delta.
In recent times, Nigeria has failed to meet its OPEC production quota of 1.75 mbpd for 2023 necessitating the oil cartel to cut its production quota for 2024. Perhaps, Nigeria’s erratic crude oil production levels might be responsible for Dangote refinery to look elsewhere for consistency in crude oil supply.