Dangote Refinery is set to venture into crude oil imports from the United States in the coming months, signaling a notable shift in the global market dynamics.
Reports from Bloomberg indicate that Trafigura Group has secured a deal to supply 2 million barrels of WTI Midland crude to the Dangote refinery, marking the refinery’s first purchase of non-Nigerian crude.
The move underscores the increasing competitiveness of American barrels on the global stage, driven by the exponential growth in US oil supply over the past decade. Traders familiar with the matter revealed that the delivery of the crude from Trafigura Group is expected by the end of February, highlighting the refinery’s openness to diversifying its crude sources.
Dangote Refinery, a newly inaugurated mega-facility with a daily processing capacity of 650,000 barrels, commenced operations earlier this month. Initially targeting a processing rate of 350,000 barrels per day, the refinery aims to gradually ramp up production towards its full capacity. The refinery’s decision to explore US crude imports aligns with broader market trends reshaping the dynamics of global oil trade.
While the refinery primarily relies on domestic crude through a supply agreement with the trading arm of the state-owned NNPCL, its recent purchase of US crude signifies a strategic move to diversify its feedstock sources. Previously, the refinery received shipments of Nigeria’s Agbami crude, with subsequent deliveries including Amenam, Bonny Light, and CJ Blend streams, facilitated by a trading unit of Shell.
The significance of this shift is amplified by Nigeria’s challenges in crude oil production over the past few years. Factors such as crude oil theft, divestment from oil majors, and insecurity in the Niger Delta have contributed to fluctuations in production levels. Nigeria’s inability to meet its OPEC production quota for 2023, set at 1.75 million barrels per day, has led to adjustments by the oil cartel for 2024.
The decision by Dangote Refinery to explore international sources, including the US, reflects a proactive approach to ensuring consistent crude oil supply amidst uncertainties in Nigeria’s production levels. As the refinery diversifies its crude feedstock, it positions itself to navigate the evolving dynamics of the global oil market while contributing to the stability and efficiency of its operations.