The Dangote Refinery and Petrochemical Company is reportedly sourcing crude oil from multiple international suppliers as it gradually increases production, amid the end of the Naira-for-Crude deal with the federal government.
As Bloomberg reported, the 650,000 bpd Refinery, which is reshaping the West African energy landscape, has recently sourced crude from the United States, Angola, and Algeria, among others.
Since the beginning of the month, the Dangote refinery has reportedly received over three million barrels of American crude, in addition to shipments from Angola and Algeria.
According to analysts at Energy Aspects Ltd., crude deliveries to the Dangote refinery have averaged 450,000 barrels per day in the past two weeks, up from an estimated 380,000 barrels per day in January and February.
“Our satellite monitoring shows a recent draw in crude stocks at the refinery, indicating runs are likely on the rise,” said Randy Hurburun, a senior refinery analyst at the consultancy.
Once fully operational, Dangote Refinery is expected to process 650,000 barrels of oil per day, making it Africa’s largest refinery and surpassing any single refinery in Europe.
The facility, which is expected to reach full capacity by H1 2025, has already reduced Nigeria’s crude oil surplus and cut down the country’s reliance on fuel imports.
End of Naira-for-Crude Initiative
Despite ramping up overseas purchases, the Dangote refinery remains heavily dependent on Nigerian crude. Last month alone, it took in over ten million barrels of local feedstock, according to tanker-tracking data compiled by Bloomberg.
The Nigerian National Petroleum Company Ltd. (NNPC) said it has supplied 48 million barrels since signing the crude supply agreement with Dangote in October.
Meanwhile, the national oil company did not state if the supplies were purchased in Naira or dollars, as Nairametrics had earlier reported that the implementation of the arrangement was inconsistent.
The Naira-for-Crude initiative was to allow local refineries to pay for crude oil in the local currency.
Nairametrics reported that the first phase of the arrangement has ended, and the NNPCL said it was in talks with the Dangote refinery to extend the deal.
Industry experts suggest that price competitiveness will continue to determine the refinery’s crude sourcing strategy.
“WTI will continue to be an attractive grade for the refinery because of its light-sweet nature and price competitiveness with local West African grades,” said Ronan Hodgson, an analyst at FGE.
“The Atlantic basin has many viable alternatives, but it all depends on the economics and terms on which they get it,” he said.
Hurburun added that with multiple options available to the Dangote refinery, it may consider crude from Libya, the North Sea, and the Mediterranean, depending on market conditions.
