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
CBN Maintain Interest Rate at 27.5%
BY Abiodun Saheed Omodara July 22, 2025 0

The Central Bank of Nigeria (CBN) has decided to keep the country's Monetary Policy Rate (MPR) at 27...

READ ALSO
Economic Reforms Slash Nigeria's Debt Servicing from 97% to 50%- Oloyede
BY Abiodun Saheed Omodara July 22, 2025 0

The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, revealed th...

READ ALSO
CBN, Private Sector Raise Concerns Over Nigeria Customs' B’Odogwu Digital Clearance System
BY Abiodun Saheed Omodara July 21, 2025 0

The Central Bank of Nigeria (CBN) and the organized private sector have expressed concerns regarding...

READ ALSO
Nigeria-Egypt Trade Surges by 68%, Foreign Minister Highlights Trade Imbalance
BY Abiodun Saheed Omodara July 21, 2025 0

Trade between Nigeria and Egypt has seen a significant increase of 68.45 percent over the past year....

READ ALSO
Enugu State Cuts Electricity Tariff for Band A Customers to N160/kWh, Effective August 1, 2025
BY Abiodun Saheed Omodara July 21, 2025 0

The Enugu State Electricity Regulatory Commission has released a new tariff order for MainPower Elec...

READ ALSO
Naira Weakens 0.14% Despite Initial Gains, Closing at 1,532.34/$
BY Abiodun Saheed Omodara July 21, 2025 0

The naira ended the past week weaker than the week before, depreciating by 0.14% week-on-week to rea...

READ ALSO
Nigeria's Electricity Tariff Subsidy Soars to N1.94 Trillion in 2024, Marking a 219.67% Increase
BY Abiodun Saheed Omodara July 18, 2025 0

The electricity tariff subsidy from the Federal Government has increased significantly from N610 bil...

READ ALSO
Nigeria Should Aim for 60,000 Megawatts of Power Generation- Dangote
BY Abiodun Saheed Omodara July 17, 2025 0

President of the Dangote Group, Alhaji Aliko Dangote, argues that Nigeria's low electricity generati...

OUR CHANNELS:

Federal High Court Discharges Female Drug Offender on Compassionate Grounds
BY Abiodun Saheed Omodara July 24, 2025 0

Justice Daniel Osiagor of the Federal High Court in Lagos on Tuesday issued a caution and discharged...


APC Set to Appoint New National Chairman at Thursday's NEC Meeting
BY Abiodun Saheed Omodara July 24, 2025 0

A new National Chairman for the ruling All Progressives Congress (APC) may be appointed on Thursday...


Military Jet Crash at Dhaka School Claims 31 Lives, Sparks Nationwide Outrage
BY Abiodun Saheed Omodara July 24, 2025 0

Dhaka, Bangladesh – Grief and anger swept across Bangladesh following the tragic crash of a mi...


UK Sentenced Traffic Robber to 24 Years for Killing Footballer
BY Abiodun Saheed Omodara July 24, 2025 0

A court in the United Kingdom has sentenced 27-year-old Oguzcan Dereli to 24 years in prison for the...


Nigerian Lawmakers Demand Reversal of U.S. Visa Policy Changes Amid Concerns Over Economic Impact
BY Abiodun Saheed Omodara July 24, 2025 0

The House of Representatives on Tuesday urged the U.S. government to reinstate the five-year multipl...


CBN Maintain Interest Rate at 27.5%
BY Abiodun Saheed Omodara July 24, 2025 0

The Central Bank of Nigeria (CBN) has decided to keep the country's Monetary Policy Rate (MPR) at 27...


PSC Seeks NDLEA Support for Drug Integrity Tests in Police Recruitment
BY Abiodun Saheed Omodara July 22, 2025 0

To enhance the integrity of Nigeria’s police recruitment, the Police Service Commission has re...


USCIS Unveils New Immigration Fee Schedule Effective July 22, 2025
BY Abiodun Saheed Omodara July 24, 2025 0

The United States Citizenship and Immigration Services (USCIS) has revealed an updated schedule of i...


Economic Reforms Slash Nigeria's Debt Servicing from 97% to 50%- Oloyede
BY Abiodun Saheed Omodara July 24, 2025 0

The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, revealed th...


Lagos Passenger Killed in Motorpark Fight
BY Abiodun Saheed Omodara July 24, 2025 0

Violence broke out in the Alaba Rago area of Iba, Lagos State due to a clash between road transport...


More Articles

Load more...

Menu