Dangote Refinery, a key player in Nigeria’s oil industry, is gearing up to diversify its crude oil sources by importing 2 million barrels of WTI Midland from the United States, marking a significant departure from its reliance on domestic Nigerian crude.
This move, revealed by insiders and reported by Bloomberg, underscores the growing competitiveness of American barrels in the global market.
Trafigura Group, a leading commodity trading company, is said to have finalized the sale of the 2 million barrels to Dangote Refinery, with delivery scheduled by the end of February. This transaction marks the first instance of the refinery opting for non-Nigerian crude, reflecting the impact of the exponential growth in US oil supply over the past decade on global oil dynamics.
Nigeria, a nation heavily dependent on petroleum exports, has been influenced by the changing dynamics in the global oil market, with the influx of American barrels reaching regions like Asia. The Dangote Refinery, with a daily processing capacity of 650,000 barrels, initiated operations earlier this month and is set to play a crucial role in the evolving landscape.
While the refinery initially sourced domestic crude through an agreement with the trading arm of the state-owned NNPCL, recent developments indicate a strategic shift. The facility has already received shipments of Nigeria’s Agbami crude and other streams, facilitated by the trading unit of Shell. Additionally, the refinery, according to the Dangote Group, is equipped to process various African crudes and can handle supplies from distant sources like the US and Saudi Arabia.
Nigeria’s struggle with erratic crude oil production, driven by factors such as oil theft, divestment from major oil companies, and insecurity in the Niger Delta, has been a significant challenge in recent years. Failing to meet its OPEC production quota for 2023, Nigeria faced production cuts for 2024. The Dangote Refinery’s decision to explore alternative sources for consistent crude oil supply may be a response to Nigeria’s fluctuating production levels, highlighting the need for stability in the face of evolving industry dynamics.
