The Lagos-based mega Dangote refinery has resumed importing crude oil from the United States after a three-month pause, as the facility increases its production levels.
The refinery purchased around two million barrels of WTI Midland crude from Chevron Corp., according to anonymous sources familiar with the deal.
The shipment is expected to arrive at the 650,000 bdp petrochemical plant in Lagos next month.
Earlier in the year, the refinery regularly imported one or two shipments of US crude each month in addition to using domestic supplies.
However, these imports were reduced around August following an agreement with the federal government that the Nigerian National Petroleum Corporation (NNPC) Limited would supply crude oil to the refinery in naira rather than dollars.
The deal is that Dangote will receive up to 400,000 barrels of local oil daily, paid for in Nigerian currency.
However, the latest report shows that Chevron hired the supertanker Azure Nova to transport the crude from the US Gulf Coast to Dangote Refinery, with loading expected around December 5, according to shipping records.
The reasons for the return to US imports remain unclear, though a report from Sparta Commodities earlier this week suggests lower shipping costs may have made US oil more affordable in Europe recently.
Dangote Ordeal to Source Crude from Nigeria
The management of Dangote has consistently raised concerns about challenges in sourcing crude oil from Nigeria.
For example, the refinery’s vice president, Edwin Devakumar, highlighted that international oil companies (IOCs) are undermining the refinery’s efforts by artificially inflating crude oil prices.
In response to this issue, the federal government approved an agreement between Dangote and the national oil company, NNPC, to supply crude oil to the refinery in naira, simplifying transactions for both parties.
However, there is a possibility that NNPC may not be able to fully meet the crude oil needs of Dangote and other local refineries due to its existing forward sales agreements involving cash swaps with international traders.
So far, Dangote has imported crude oil from both the United States and Brazil. Devakumar also noted that the refinery is exploring the option of sourcing crude from Libya for its operations.
What you should know
The Dangote Refinery, the largest single-train refinery in Africa and Europe, is set to reduce Nigeria’s heavy reliance on imported fuel.
Despite being Africa’s largest oil producer, Nigeria imports most of its fuel due to inadequate refining capacity, a challenge the refinery aims to solve.
In addition to serving local needs, the refinery has begun exporting products to Europe and African countries.
Nairametrics previously reported that its first petrol export was sent to Togo, marking a significant milestone in its operations. (Nairametrics)