There are strong indications that the Dangote Refinery, a major player in Nigeria’s oil industry, is set to diversify its crude oil supply sources by turning to the United States in the coming months. Bloomberg reported this significant development on Monday, signaling a potential shift in the global dynamics of crude oil supply.
Nigeria, the home country of the newly inaugurated 650,000 barrels per day refinery, has been grappling with challenges in meeting its crude oil production quotas. Factors such as crude oil theft, divestment from oil majors, and insecurity in the Niger Delta have contributed to Nigeria’s inability to consistently meet OPEC production targets, including the 2023 quota of 1.75 million barrels per day (mbpd).
The Dangote Refinery’s decision to explore the US as a source for consistent crude oil supply is seen as a strategic move in response to Nigeria’s erratic production levels. Traders familiar with the matter revealed that Trafigura Group has already sold 2 million barrels of WTI Midland to the Dangote Refinery, marking the first instance of the refinery purchasing non-Nigerian crude. This move reflects the changing landscape of global oil markets, with the US emerging as a key player in influencing supply dynamics.
The 650,000 barrel-a-day oil refinery, which commenced operations earlier this month, initially targets processing 350,000 barrels per day and aims to gradually increase production to its full capacity. While the refinery has traditionally sourced domestic crude through a supply agreement with the trading arm of the state-owned NNPCL, the recent purchase of US crude suggests a diversification strategy.
In addition to handling domestic feedstock, the mega-facility, according to the Dangote Group, is equipped to process various African crudes and supplies from distant sources such as the US and Saudi Arabia.
