Dangote Refinery To Buy 24m Barrels Of Crude From US Due To Nigeria’s Low Production Capacity

Dangote Refinery plans to increase its processing capacity by purchasing at least 24 million barrels of US oil over the course of the next year.

The $20 billion refinery has put out a term tender for the acquisition of 2 million barrels of West Texas Intermediate Midland (WTI) oil every month for a period of 12 months beginning in July, that is 24 million barrels of crude in a year, according to a report by Bloomberg.

The need for US oil is a reflection of Dangote’s readiness to access less expensive supplies than it can find domestically and Nigeria’s difficulty in increasing its own crude output, which is still much below theoretical capability. It also emphasizes the refinery’s significant impact on the world’s fuel and oil commerce.

The executive director of Citac, an energy consulting firm that focuses on the downstream industry in Africa, Elitsa Georgieva, stated: “The supply of Nigerian crude is insufficient or unavailable and can be inconsistent.” Conversely, WTI is affordable, readily available, and has a consistent supply.

“Buying different feed stocks also provides flexibility and optionality for the refinery, so the tender makes economic sense for Dangote.”

For the past year at least, Nigeria has been unable to fulfill its Organization of Petroleum Exporting Countries (OPEC) plus quota. In April, the country produced around 1.45 million barrels of oil and liquids per day, which is still significantly less than its projected 2.6 million barrels per day production capability. [CONTINUE READING HERE]