A recent report by S&P Global reveals that the United States has become a key supplier of crude oil to Nigeria’s Dangote Refinery. The US accounts for 30 percent of the 47 cargoes delivered to the facility so far. This contribution highlights the growing role of US crude in meeting the refinery’s feedstock needs.
The Dangote Refinery, which has ramped production to 400,000 barrels per day (bpd), produces diesel, jet fuel, naphtha, and fuel oil for domestic and export markets. Petrol, Nigeria’s primary fuel type, is expected to be produced from mid-August.
According to the report, “The US grade has accounted for 30 percent of crude delivered to Dangote, through 18 cargoes.” While traders speculate that the US grade could compete with domestic supply on pricing in the long term, the report suggests that its status as a staple for the refinery might become uncertain.
One significant issue affecting this supply chain is the difficulty accessing foreign exchange. This challenge has caused PetroChina vessels loaded with WTI Midland crude to remain anchored off the refinery for weeks. The Chinese firm has reportedly been reluctant to swap crude for products, further complicating the situation.
The report also notes that crude flows in and out of the Dangote Refinery have impacted other markets, especially in Europe, which is the largest consumer of light, sweet Nigerian crude. Data from S&P Global Commodities at Sea (CAS) shows that European imports of Nigerian crude have decreased since January, with US oil imports falling even more.
It’s worth noting that countries such as Brazil, Egypt, Libya, and Guyana have boosted their supply to meet the demand. Interestingly, Nigeria, which historically did not import crude, has seen the sharpest rise in WTI Midland imports worldwide since the refinery’s opening. This increased demand for WTI Midland might have an impact on its primary export markets in Asia and Europe, where it has served as a flexible grade in recent years.
For the past two years, Europe has increased WTI Midland imports by 20% to fill gaps left by sanctioned Russian oil. On a macro basis, Nigerian exports have fallen in successive quarters since last year. CAS data indicates that Nigeria exported 1.4 million bpd in Q1 2024 and 1.24 million bpd in Q2 2024, down from 1.5 million bpd in Q4 2023.
During a recent tour of the refinery with journalists, Aliko Dangote, president of Dangote Industries, confirmed that the refinery is fully operational, expecting to generate over $26 billion annually. “Successful completion of the trial run in January 2024. Refined and intermediate products include polypropylene, naphtha, RCO, gasoline, diesel, and jet fuel. The steady state production phase commenced in March 2024,” Dangote stated.
The refinery plans to increase production to 500,000 bpd by next August, 550,000 bpd by the end of the year, and 650,000 bpd by the first quarter of 2025. Gasoline production is set to begin in July, with sales starting in August. Dangote highlighted that the refinery features dedicated loading gantries with 86 loading bays, dedicated marine facilities for offloading crude and loading petroleum products, and a 900-kilo tonne per annum polypropylene plant, along with facilities for producing sulfur and carbon black.
