The Dangote Oil Refinery, Sub-Saharan Africa’s largest petrochemical complex and controlled by the continent’s richest man, is preparing to import 2 million barrels of West Texas Intermediate (WTI) Midland crude from the United States.
This choice, corroborated by traders familiar with the situation, demonstrates the refinery’s consideration of costs, logistical feasibility, and processing capacity. Notably, this is the refinery’s first time obtaining non-Nigerian oil, raising doubts about the rationale behind the decision.
Trafigura Group, a multinational commodity trading corporation headquartered in Singapore with significant hubs in Geneva and Houston, acquired the contract for the end-of-February delivery of US oil to the Dangote Oil Refinery.
While the actual reasons for importing US crude remain unknown, industry traders assume that pricing considerations may be a major issue. WTI Midland barrels are often more competitively priced than Nigerian qualities, which are often benchmarked to North Sea grade Brent.
Dangote Oil Refinery’s decision signifies a substantial shift in approach.
Initially, the refinery promised to refine only Nigerian oil, demonstrating its commitment to meeting Nigeria’s need for refined petroleum products. The plant, with a world-record capacity of 650,000 barrels per day, intends to meet all of the country’s needs for gasoline, diesel, kerosene, and jet fuel.
The refinery’s move to diversify its crude sources comes on the heels of resuming production of diesel and aviation fuel, following the delivery of the sixth batch of crude barrels supplied by the Nigeria National Petroleum Corporation (NNPC).
The Dangote Oil Refinery’s infrastructure is designed to international standards and features truck-loading gantries capable of efficiently loading 2,900 trucks per day.
As the refinery approaches full capacity, the decision to import US crude highlights the changing nature of the energy market, as well as the strategic considerations involved in the pursuit of operational efficiency and cost-effectiveness.
