Would you like to receive notifications on latest updates of the following headlines?

Dangote Refinery To Revamp Global Crude Flows --- Report

POSTED ON August 3, 2024 •   Business      BY Benedicta Bassey •   VIEWS 112
Founder/President of Dangote Group, Aliko Dangote/ Photo credit: Punch

Nigeria’s $20 billion Dangote refinery is set to revamp international crude flows when it reaches full capacity, according to information contained in the trading sources and ship tracking data.

Nigeria is sub-Saharan Africa’s largest oil producer, pumping 1.5 million b/d in June, according to the Platts OPEC Survey from S&P Global Commodity Insights.

Until this year, all of the country’s oil was exported due to lack of refining capacity, with gasoline, diesel and jet fuel imported for domestic use.

In its first six months, the plant has scaled to 400,000 b/d and delivered diesel, jet fuel, naphtha and fuel oil to both domestic and export markets, according to ship tracking data.

Nevertheless, the refinery has already affected crude flows, with dozens of Nigerian cargoes remaining in-country and US WTI Midland, a comparable light, sweet grade, being imported, the S&P report disclosed.

The mega-refinery could therefore tighten the light, sweet crude market.

Insight by the West African Crude Trader posited that “Its diet is WTI and the lighter Nigerian [crudes] so if you were chasing those barrels you’d probably feel it quite keenly.

“Once they get to 650,000 b/d without any WTI Midland, ‘severely disrupted’ (will be) the headline.”

WTI Midland crude initially emerged as the favoured feedstock to supplement Nigerian supply, with the refinery signing long-term supply contracts for the US grade and noting its competitive pricing. 

Platyts, part of Commodity Insights, last assessed WTI Midland into Rotterdam at $82.36/b on July 31, while Nigeria’s Bonny Light was assessed at $82.80/b on the same day.

The US grade accounted for 30 per cent of crude delivered to Dangote, through 18 cargoes.

Domestically, Dangote has alleged that IOCs had been charging it a $6/b premium for crude in June, leading Nigeria’s government to mandate local supply at “market price” and facilitate crude payments in naira.

“The refinery was built to use Nigerian crude and add value to it within Nigeria. Why should we deviate from that focus?,” a Dangote executive said, adding that the crude supply issues were, “getting resolved,” but that the refinery remained open to all opportunities “to supplement it”.

“Dangote refinery is designed to process a range of light and medium grades of crude oil, including Nigerian grades,” Associate Director and Head of Refining at S&P Global Commodity Insights, Rasool Barouni, said.

Crude flows in and out of the Dangote refinery have been felt in other markets, especially in Europe, the largest consumer of light, sweet Nigerian crude.

S&P Global commodities at sea data shows European imports of Nigerian crude have slumped since January, with only imports of US oil falling by more. 

Meanwhile, Brazil, Egypt, Libya and Guyana have boosted supply to Europe. Analysts caution that refinery maintenance and other factors could have played a role.

Nigeria — which previously did not import crude — has seen the largest increase in WTI Midland imports globally since the refinery’s inauguration.

A growing call on WTI Midland could affect Asia and Europe, the main export markets for the US crude which has emerged as a “swing” grade in recent years.

On a macro basis, Nigerian exports have fallen in successive quarters since last year. CAS data shows Nigeria exported 1.4 million b/d in Q1 2024 and 1.24 million b/d in Q2 2024, down from 1.5 million b/d in Q4 2023.

Analysts are waiting for the plant to hit 600,000 b/d and start producing gasoline before assessing its impact.

“The refinery’s opening has certainly had an impact on trade flows, especially for Nigerian crudes and WTI,” research associate director at Commodity Insights, Payam Hashempour, said.

“But, we should see the full impact on global trade flows once the refinery’s operation kicks off.”

RECOMMENDED FOR YOU
Proposed tax reform bills not against North, says Presidency
BY Abiodun Saheed Omodara October 31, 2024 0

The Presidency has said contrary to job loss fears and perceived marginalisation of the North, the t...

RECOMMENDED FOR YOU
Kaduna approves N72,000 minimum wage
BY Abiodun Saheed Omodara October 31, 2024 0

The Kaduna State Governor, Uba Sani, has approved a new minimum wage of N72,000 for civil servants i...

RECOMMENDED FOR YOU
32 states get 55% of revenues from FAAC – Report
BY Abiodun Saheed Omodara October 30, 2024 0

A new report by civic-tech organisation, BudgIT, has revealed that 32 out of Nigeria’s 36 stat...

RECOMMENDED FOR YOU
2025 budget: Tinubu to submit MTEF to N’Assembly next week – Senate spokesman
BY Abiodun Saheed Omodara October 30, 2024 0

President Bola Tinubu will submit the Medium Term Expenditure Framework and Fiscal Strategy Paper to...

RECOMMENDED FOR YOU
FG must be intentional about addressing hunger, poverty in Nigeria — Security expert
BY Benedicta Bassey October 29, 2024 0

High Chief Aimanerimi Victor Arogunyo is the spokesperson for Akoko-Edo Security Network and the Nat...

RECOMMENDED FOR YOU
Nigeria loses $2.5bn to non-implementation of ICTN- Shippers council
BY Abiodun Saheed Omodara October 29, 2024 0

Nigeria lost about $2.5bn in five years, and $500m annually due to the non-implementation of the Int...

RECOMMENDED FOR YOU
CBN plans to raise fines on erring banks
BY Abiodun Saheed Omodara October 29, 2024 0

The Central Bank of Nigeria is preparing to impose stricter fines on banks that fail to comply with...

RECOMMENDED FOR YOU
IFC, CBN in $1bn Partnership to boost local currency financing in Nigeria
BY Abiodun Saheed Omodara October 28, 2024 0

The International Finance Corporation, a member of the World Bank Group and Nigera’s Central B...

OUR CHANNELS:

OTHER ARTICLES ::

6th November, 2024
Economic Showdown: Atiku's Critique vs. Tinubu's Policies A Leadership Divide
BY ROCKETPARROT.com staff November 5, 2024 0

In a recent exchange highlighting the growing tensions in Nigeria's political landscape, former Vice...


Indianapolis Woman Dies in I-65 Accident Near Columbus After Return from Kentucky Event
BY ROCKETPARROT.com staff November 5, 2024 0

COLUMBUS, Ind. — A tragic accident claimed the life of Indianapolis resident Omotope G. Oyedir...


Adriano's Decline: From Football Glory to Favela Streets
BY ROCKETPARROT.com staff November 5, 2024 0

Health concerns arise as a recent video surfaces showing Adriano, the former Inter Milan and Brazil...


Proposed tax reform bills not against North, says Presidency
BY Abiodun Saheed Omodara November 5, 2024 0

The Presidency has said contrary to job loss fears and perceived marginalisation of the North, the t...


Kaduna approves N72,000 minimum wage
BY Abiodun Saheed Omodara November 5, 2024 0

The Kaduna State Governor, Uba Sani, has approved a new minimum wage of N72,000 for civil servants i...


Man Utd seal deal with Amorim as new manager — Report
BY Abiodun Saheed Omodara November 5, 2024 0

Manchester United has finalised an agreement with Sporting Lisbon to appoint 39-year-old Ruben Amori...


Nile Group collaborates with Ooni of Ife to manage his theaters
BY Ebiakuboere England November 5, 2024 0

His Imperial Majesty, the Ooni of Ife, and Nile Cinemas have inked a historic management contract fo...


Bruno Mars tops Spotify monthly listeners record
BY Ebiakuboere England November 5, 2024 0

Grammy-winning singer Bruno Mars has broken the previous record with 120,862,858 monthly Spotify lis...


South Africa to strip Chidimma Adetshina of ID documents
BY Ebiakuboere England November 5, 2024 0

Nigerian-South African Model Chidimma Adetshina faces the possibility of losing her national documen...


Senate confirms seven ministerial nominees
BY Benedicta Bassey November 5, 2024 0

The Senate has screened and confirmed seven ministerial nominees appointed by President Bola Ahmed T...


Menu