Dangote Refinery Banks on FG, Reduces Crude Imports from Us
A report by Bloomberg has revealed that the Dangote Petroleum Refinery is reducing its importation of crude from the United States, taking more of Nigeria’s oil for processing.
The report stated that the 650,000 refinery is set to import just over four-fifths of its feedstock from domestic sources in the third quarter. That compares with less than three-quarters in the prior quarter, according to tanker-tracking data and information from traders.
It was learnt that oil prices were pressured last month on reports that the plant planned on re-selling some of the US barrels it previously purchased, underscoring the pivotal role Dangote already plays within Atlantic basin petroleum markets.
The refinery’s efforts to dial back overseas crude purchases potentially leave more US export barrels competing for buyers elsewhere.
The pivot could even gather pace in the coming months as the Federal Government would start selling crude in the local currency to Dangote from October 1.
It is not yet certain how much supply will be traded under the system but if the 450,000 meant for local consumption is exhausted, the process could leave Dangote requiring hardly any overseas crude.
The $20bn Dangote refinery in Lekki, Lagos, has taken in more than 56 million barrels of crude since December as it completed test runs and gradually lifted processing. Of that, 78 per cent has been local supply.
It took six cargoes of crude directly from the Nigerian National Petroleum Company Limited for next month, a company spokesman told Bloomberg earlier this month.
Most Nigerian cargoes are about one million barrels each. A further two shipments from Nigeria as well as two million barrels of WTI Midland are slated for September arrival, the tanker-tracking data show.
The plant will have taken in an average of almost 10 million barrels per month in the six months through September.
Inflows of American feedstock had been expected to increase significantly earlier in the summer.
However, some of the US barrels it bought for this month and next were being resold, a claim that was debunked by the refinery in late July.
It also scrapped two tenders in which it had been looking to purchase a further 6 million barrels of American crude for September, according to traders.
