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According to reports from Bloomberg, Dangote Refinery is set to import crude oil from the United States, marking the first time the refinery has purchased non-Nigerian crude oil. Trafigura Group has reportedly sold 2 million barrels of WTI Midland to the Dangote refinery, with delivery expected by the end of February.
Key points:
- US Crude Competitiveness: The move to import crude oil from the United States signals the increasing competitiveness of American barrels in the global market.
- Global Market Impact: The exponential growth in US oil supply over the past decade has reshaped the global market, extending its influence to regions like Asia. Nigeria, heavily reliant on petroleum exports, is particularly impacted by these transatlantic deliveries.
- Dangote Refinery Operations: The new Dangote refinery recently commenced operations with a capacity of 650,000 barrels per day. It initially targets a processing rate of 350,000 barrels daily, with plans to gradually escalate production to its full capacity.
- Domestic and International Feedstock: While the refinery primarily sources domestic crude through a supply agreement with the trading arm of the state-owned NNPC, it is now expanding its sources. In addition to Nigerian crude, the refinery is capable of processing various African crudes and supplies from distant sources such as the US and Saudi Arabia.
- Challenges in Nigeria’s Crude Production: Nigeria has faced challenges in crude oil production due to issues like crude oil theft, divestment from oil majors, and insecurity in the Niger Delta. The country has struggled to meet its OPEC production quota, leading to a cut in the quota for 2024.
The decision by Dangote Refinery to diversify its crude oil sources reflects a strategic move to ensure a consistent and reliable feedstock supply amid challenges in Nigeria’s crude production levels.
