Dangote Refinery shifts focus to local crude amid govt support

• Published On: 22 August 2024 at 18:46

The Dangote Refinery, Africa's largest with a capacity of 650,000 barrels per day, plans to significantly reduce its reliance on imported crude oil from the United States, instead turning to Nigerian suppliers.

According to Bloomberg, the refinery expects to source more than 80% of its crude oil domestically in the third quarter of 2024, up from less than 75% the previous quarter.

This strategic shift comes after the federal government's recent decision to allow the refinery to buy crude oil in Naira. The move is intended to relieve pressure on the country's foreign exchange reserves and simplify transactions for both the government and the refinery.

Aliko Dangote, CEO of the Dangote Refinery, has expressed ongoing frustrations with his petrochemical plants' inability to secure crude oil from the Nigerian National Petroleum Corporation and international oil companies operating in Nigeria.

Due to supply constraints, the refinery has had to source a significant portion of its feedstock from the United States and Brazil in order to meet production demands.

The refinery's reliance on imported crude has presented challenges, despite its strategic location in Nigeria, one of the world's major oil-producing countries.

At one point, one-third of its feedstocks were imported from the United States, with Dangote claiming that the IOCs are attempting to undermine the refinery's success.

Meanwhile, the Dangote Refinery has announced plans to source 80% of its crude oil needs locally, reducing its imports from the United States.

A company spokesperson confirmed that the refinery will receive six shipments of crude oil from the NNPC next month, each containing approximately one million barrels.

According to tanker-tracking data, two additional shipments from Nigeria, as well as two million barrels of WTI Midland crude, are expected to arrive in September.

This transition is a watershed moment for the refinery and could have far-reaching consequences for Nigeria's energy sector, potentially boosting local oil producers and reducing the country's reliance on imported crude oil.

As previously reported, the federal government announced that crude oil sales to the Dangote Refinery in naira will begin on October 1, 2024.