spot_imgspot_img
spot_img

Dangote Refinery Secures 24m Barrels of US Crude

Date:

Dangote Refinery is set to boost its processing capacity with a significant procurement plan, aiming to purchase a total of 24 million barrels of US oil over the next year.

According to recent reports, the $20 billion refinery has issued a term tender for the acquisition of 2 million barrels of West Texas Intermediate Midland (WTI) crude every month for the next 12 months, starting in July. This strategic move aligns with the refinery’s objective to diversify its oil sources and optimize operational costs.

The decision to opt for US oil underscores Nigeria’s ongoing challenge of ramping up its crude production, which still falls short of its full potential. Moreover, it reflects Dangote’s proactive strategy to secure more cost-effective oil supplies from international markets, indicating the refinery’s increasing influence on global crude and fuel trading dynamics.

Mrs. Elitsa Georgieva, Executive Director of Citac, a prominent energy consulting firm specializing in the African downstream sector, emphasized the advantages of US crude procurement. She highlighted that while Nigerian crude supply often faces constraints, WTI offers affordability, reliability, and consistent availability. This move also affords Dangote Refinery greater flexibility in choosing alternative feedstocks, further enhancing its economic viability.

In recent months, Nigeria has struggled to meet its Organization of Petroleum Exporting Countries (OPEC) Plus quota, with production hovering around 1.45 million barrels per day in April, significantly lower than its estimated capacity of 2.6 million barrels per day. Various factors, including crude theft, infrastructure challenges, underinvestment, and divestitures from national oil companies, have contributed to this production shortfall.

To ensure sufficient local supply for its 650,000 barrel-a-day refinery, Nigeria’s upstream regulator, the Nigeria Upstream Petroleum Regulatory Commission (NUPRC), recently introduced new draft rules. These regulations mandate oil producers to prioritize domestic refineries for crude supply. Producers must fulfill these local supply obligations before considering export options.

In cases where agreements on crude supply cannot be reached, the NUPRC will act as an intermediary between local refiners and producers, facilitating sales purchase agreements based on the willing-buyer, willing-seller model.

This strategic shift towards domestic sourcing is poised to benefit Dangote Refinery, reducing its reliance on imported crude. With the refinery currently operating at approximately half capacity, the adoption of cheaper US oil imports for a significant portion of its feedstock is expected to enhance its operational efficiency. Since the beginning of the year, the refinery has received regular deliveries of WTI Midland crude, with at least one supertanker carrying about 2 million barrels each month.

While an official statement from Dangote remains pending, a source familiar with the matter confirmed the procurement plans.

Leave a Reply

Share post:

Subscribe

spot_img

Popular

More like this
Related

Police Rescue Kidnapped Victim, Neutralize One Suspect in Akwa Ibom

A 63-year-old retired Shell Petroleum Company Worker, abducted and...

Gunmen Kidnap Driver and Police Orderly of Traditional Ruler in Port Harcourt

Gunmen have kidnapped a driver and police orderly working...

Customs Intercepts Illicit Drug Cargo Valued at Millions of Naira in Onne Port

Nigeria Customs Service says contraband drugs worth millions of...

Federal Government Unveils Plans for Solid Minerals Sector to Boost Foreign Reserve

The federal government says the Solid Minerals Sector and...