The Dangote refinery plans to purchase crude from the United States in the next months, indicating that American barrels are becoming more competitive in the global market.
Bloomberg reported this.
Traders familiar with the subject have revealed that Trafigura Group has sold 2 million barrels of WTI Midland to the Dangote refinery for delivery by the end of February. This is the first time the refinery has purchased non-Nigerian crude.
The exponential rise of US oil supply over the last decade has changed the global market, extending its reach to regions such as Asia. Nigeria, whose economy is strongly reliant on petroleum exports, is especially affected by these transatlantic deliveries.
The massive 650,000 barrel-per-day oil refinery began functioning earlier this month. Initially targeting a processing rate of 350,000 barrels per day, the refinery intends to progressively increase production to full capacity.
While the refinery predominantly sources domestic crude through a supply arrangement with the trading arm of the state-owned NNPCL, it recently received its first shipment of Nigerian Agbami crude, which was enabled by a Shell trading unit. Amenam, Bonny Light, and CJ Blend streams from Nigeria were among the subsequent deliveries.
In addition to processing domestic feedstock, the recently inaugurated mega-facility can process diverse African crudes as well as supplies from foreign sources such as the United States and Saudi Arabia, the Dangote Group announced earlier this month.
Nigeria’s irregular crude oil output
- Nigeria has faced a crude oil output constraint in recent years as a result of increased crude oil theft, divestment by oil companies, and instability in the Niger Delta.
- In recent times, Nigeria has failed to reach its OPEC production quota of 1.75 mbpd for 2023, forcing the oil cartel to reduce its output allotment for 2024. Perhaps Nigeria’s fluctuating crude oil output levels have caused Dangote refinery to explore elsewhere for consistent crude oil supply.
Credit: Naira Metrics