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
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.”

READ ALSO
IPMAN Links Rising Petrol Prices to Crude Oil Costs and Market Dynamics
BY Abiodun Saheed Omodara June 24, 2025 0

ABUJA, Nigeria (NAN) - The Public Relations Officer of the Independent Petroleum Marketers Associati...

READ ALSO
NGX Opens Week Bullish, Gains N279bn Amid Renewed Investor Confidence
BY Abiodun Saheed Omodara June 23, 2025 0

The Nigerian Exchange Limited (NGX) commenced the trading week on a bullish trajectory, adding N279...

READ ALSO
Oil Prices Surge Amid U.S. Airstrikes on Iran's Nuclear Sites
BY Abiodun Saheed Omodara June 23, 2025 0

Oil prices rose on Monday while the dollar gained strength following the U.S. airstrikes on Iran's n...

READ ALSO
POS Terminals Drive N223tn in Transactions Amid Shift From ATMs
BY Abiodun Saheed Omodara June 23, 2025 0

Point of Sale (POS) terminals processed transactions worth N223.27 trillion in 2024, marking a drama...

READ ALSO
Palm Oil Trade Boosting Bilateral Ties with Nigeria - Malaysia’s Envoy
BY Abiodun Saheed Omodara June 23, 2025 0

The High Commissioner of Malaysia to Nigeria, Aiyub Omar, has reveal that  the thriving pa...

READ ALSO
African Energy Chamber Urges World Bank to Lift Ban on Upstream Oil and Gas Financing
BY Abiodun Saheed Omodara June 19, 2025 0

The African Energy Chamber (AEC) has called on the World Bank to lift its ban on financing upstream...

READ ALSO
FG to Reclaim Dormant Oil Wells as NUPRC Implements 'Drill or Drop' Policy
BY Abiodun Saheed Omodara June 13, 2025 0

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has informed oil producers of its inte...

READ ALSO
Nigeria's $5bn Crude-for-Loan Deal with Aramco Faces Major Setbacks amid Falling Oil Prices
BY Abiodun Saheed Omodara June 11, 2025 0

A $5 billion crude-for-loan agreement between the Federal Government and Saudi Arabian oil giant Ara...

OUR CHANNELS:

French Police Arrest 12 over Alleged Drugging of Women at Music Festival
BY Abiodun Saheed Omodara June 24, 2025 0

French police have arrested 12 individuals suspected of drugging female festivalgoers during the ann...


NATO Warns Iran Against Nuclear Weapon Development Amid Rising Tensions
BY Abiodun Saheed Omodara June 24, 2025 0

In a renewed effort to curb escalating violence in the Middle East, the North Atlantic Treaty Organi...


Mertens Announces Retirement from Football, Cites Age and Fatigue
BY Abiodun Saheed Omodara June 24, 2025 0

Belgian football star Dries Mertens has officially announced his retirement from professional footba...


Qatar Closes Airspace After Iranian Strike on U.S. Base in Doha
BY Abiodun Saheed Omodara June 24, 2025 0

In a swift move to safeguard lives and property, the government of Qatar has closed its airspace fol...


Tinubu Launches National Mechanised Farming Programme to Tackle Food Insecurity
BY Abiodun Saheed Omodara June 24, 2025 0

In a bid to combat food insecurity and encourage youth participation in farming, President Bola Tinu...


NGX Opens Week Bullish, Gains N279bn Amid Renewed Investor Confidence
BY Abiodun Saheed Omodara June 24, 2025 0

The Nigerian Exchange Limited (NGX) commenced the trading week on a bullish trajectory, adding N279...


EFCC Urges Students to Shun Internet Fraud, Embrace Positive Online Ventures
BY Abiodun Saheed Omodara June 24, 2025 0

The Chairman of the Economic and Financial Crimes Commission (EFCC), Ola Olukoyede, has called on Ni...


Abia Govt Vows Crackdown After Cult Clash Leaves One Dead
BY Abiodun Saheed Omodara June 24, 2025 0

ABIA, Nigeria - A suspected cultist was shot dead while another was apprehended following a violent...


Tinubu Showoff Chicago Classmate Amid Lingering Certificate Forgery Controversy
BY Abiodun Saheed Omodara June 24, 2025 0

ABUJA, Nigeria - Amid ongoing public debate over his academic credentials, President Bola Tinubu on...


Oil Prices Surge Amid U.S. Airstrikes on Iran's Nuclear Sites
BY Abiodun Saheed Omodara June 24, 2025 0

Oil prices rose on Monday while the dollar gained strength following the U.S. airstrikes on Iran's n...


More Articles

Load more...

Menu