Nigeria’s Dangote Refinery is significantly boosting its use of domestic oil sources, marking a reduction in crude imports from the United States. Recent data from Bloomberg shows that the refinery aims to source over 80% of its feedstock from local suppliers in the third quarter, up from less than 75% in the previous period. This shift, driven by tanker-tracking data and trader insights, represents a substantial move towards decreasing Nigeria’s reliance on foreign oil and enhancing local production.
This development occurs as international oil prices have faced downward pressure since July, underscoring the importance of bolstering domestic production for Nigeria’s economic stability. The Nigerian government has introduced a new system in October that allows Dangote to purchase crude oil using local currency. This change is anticipated to further increase domestic oil processing capabilities.
The new system could potentially allocate up to 445,000 barrels of crude per day to Dangote, significantly decreasing the need for imported oil. Since December, the refinery has processed over 56 million barrels of crude, with 78% sourced locally, following successful test runs and a gradual increase in operations. This trend suggests that Dangote may soon achieve near self-sufficiency in crude supply.
In July, Reuters reported that the refinery was offering various crude grades, including US West Texas Intermediate (WTI) Midland and Nigerian Escravos and Forcados crudes. However, Dangote Petroleum Refinery denied these claims. Chief Branding and Communication Officer for Dangote Group, Anthony Chiejina, dismissed the allegations as false, clarifying that the refinery is not authorized to sell any crude acquired from Nigeria and that the Crude Distillation Unit (CDU) is operating efficiently. Chiejina urged the public to disregard what he called misleading narratives intended to discredit the refinery.
The refinery’s situation has been further complicated by ongoing regulatory disputes. On June 4, Aliko Dangote, Africa’s richest individual, highlighted challenges with international oil companies in supplying crude to the refinery. The Independent Petroleum Producers Group (IPPG) has also opposed mandatory crude sales to Dangote and other local refineries, advocating for a “willing buyer, willing seller” approach.
SaharaReporters previously reported that the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) unveiled a crude oil production forecast for the second half of 2024, indicating that producers would sell crude to local refineries. Nevertheless, IPPG Chairman Abdulrazak Isa expressed concerns in a letter dated August 16, 2024, suggesting that the Nigerian National Petroleum Corporation (NNPC) should use its allocated 445,000 barrels per day of intervention crude to address the current situation, with any unmet demand to be treated as export volumes.
For more updates, join our WhatsApp channel: https://whatsapp.com/channel/0029VabITrvEAKW7DSkTfP0JDangote