Alhaji Aliko Dangote, President and Chief Executive of Dangote Group, has reaffirmed that the $20 billion Dangote Petroleum Refinery was designed to process Nigerian crude oil and add value domestically. Despite this focus, Dangote acknowledged that the refinery has been refining crude oil grades from Europe, the United States, and other countries.
In a statement released by the refinery on Thursday, Dangote questioned why the plant should deviate from its primary objective. He noted that ongoing efforts are addressing domestic crude oil supply issues in Nigeria.
The statement highlighted that the refinery’s operations have already influenced crude flows, with Nigerian cargoes remaining in-country and US WTI Midland—a comparable light, sweet grade—being imported. This shift is expected to tighten the market for light, sweet crude.
“A West African crude trader mentioned that the refinery’s diet of WTI and lighter Nigerian crudes could impact those barrels significantly,” the statement read. It added that WTI Midland crude has become a favored feedstock to supplement Nigerian supply, with the refinery securing long-term supply contracts for the US grade due to its competitive pricing.
The refinery’s impact is also being felt in Europe, the largest consumer of light, sweet Nigerian crude. According to the statement, WTI Midland crude has accounted for 30 percent of the crude delivered to Dangote’s refinery through 18 cargoes.
Dangote also stated that the facility will broaden its feedstock sources to include Libyan, Angolan, and Brazilian crude. “The refinery was built to use Nigerian crude and add value within Nigeria. Why should we deviate from that focus?” Dangote said, emphasizing that while domestic crude supply issues are being addressed, the refinery remains open to opportunities to supplement its supply.
Rasool Barouni, Associate Director and Head of Refining at S&P Global Commodity Insights, noted that the Dangote refinery is designed to process a range of light and medium grades of crude oil, including Nigerian grades, and could potentially use other similar West African grades.
Nigeria, which is sub-Saharan Africa’s largest oil producer, pumped 1.5 million barrels per day in June, according to the Platts OPEC Survey from S&P Global Commodity Insights. Until this year, Nigeria exported all its oil due to a lack of refining capacity, importing gasoline, diesel, and jet fuel for domestic use.
The statement also mentioned that the Organisation of Petroleum Exporting Countries (OPEC) has indicated that supplies from the Dangote Refinery would impact Europe’s oil industry, particularly in Northwest Europe’s gasoil sector. OPEC’s June 2024 Oil Market Report listed the refinery among top diesel and jet fuel suppliers expected to disrupt Europe’s oil and gas industry, a development anticipated to positively affect the Nigerian economy.
In response to recent media reports, the Dangote refinery clarified its stance on crude supply. “We have never accused NNPC of not supplying us with crude. Our concern has been NUPRC’s reluctance to enforce the domestic crude supply obligation and ensure we receive our full crude requirement from NNPC and the IOCs,” the statement said. It added that for September, the refinery required 15 cargoes, of which NNPC allocated six. Despite appeals to NUPRC, the refinery has struggled to secure the remaining cargoes and has had to purchase Nigerian crude from international traders at a premium.
The refinery reiterated its call for NUPRC to fully enforce the domestic crude supply obligation as mandated by the Petroleum Industry Act (PIA).
