Dangote Refinery Boosts Domestic Crude Oil Processing, Reduces US Imports –Report
The increasing reliance on domestic oil sources by Dangote Refinery signals a significant step towards reducing Nigeria’s dependence on foreign oil and promoting local production.
Nigeria’s Dangote mega-refinery is increasingly relying on domestic oil sources for processing, while imports from the US are declining.
According to Bloomberg data, the refinery plans to source over 80% of its feedstock from local suppliers in the third quarter, up from less than 75% in the previous quarter, based on tanker-tracking data and trader insights.
The increasing reliance on domestic oil sources by Dangote Refinery signals a significant step towards reducing Nigeria’s dependence on foreign oil and promoting local production.
This development comes at a time when international oil prices have been under pressure since July, making domestic production a crucial aspect of the country’s economic growth and stability.
The Nigerian government’s introduction of a new system in October, allowing Dangote to purchase crude oil in local currency, is expected to further boost domestic oil processing.
The system could potentially allocate up to 445,000 barrels per day of the nation’s crude to Dangote, significantly reducing the need for foreign oil imports.
Since December, the refinery has processed over 56 million barrels of crude, with 78% sourced locally, following successful test runs and gradual ramp-up of operations.
This trend is likely to continue, with the potential for Dangote to become nearly self-sufficient in crude supply.”
Reuters in July reported that the refinery was offering various grades of crude, including US West Texas Intermediate (WTI) Midland and Nigerian Escravos and Forcados crudes.
However, Dangote Petroleum Refinery denied these claims.
Reuters report also suggested that such reselling practices, though rare, are not unprecedented.
In response, Chief Branding and Communication officer for Dangote Group, Anthony Chiejina, labelled the claims as false.
“Our attention has been drawn to a misleading report on our crude distillation unit and the allegation that we are offering crude for resale,” Chiejina stated.
He also emphasised that the refinery was not authorised to sell any of the crude it acquired from Nigeria and affirmed that the Crude Distillation Unit (CDU) is operating efficiently.
Chiejina also urged the public to disregard what he termed as false narratives intended to discredit the refinery.
The controversy surrounding the refinery has escalated amid ongoing regulatory disputes.
On June 4, Aliko Dangote, Africa’s wealthiest individual, revealed difficulties with international oil companies (IOCs) in supplying crude to the refinery.
Oil producers, under the aegis of the Independent Petroleum Producers Group (IPPG) have also warned against forcing them to sell crude oil to the Dangote Refinery and other local ones in Nigeria.
They asked the regulators to allow the sale of crude to the Dangote Petroleum Refinery and other local refineries to be based on a “willing buyer, willing seller” basis.
SaharaReporters has previously reported that the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) on August 12, unveiled crude oil producers’ production forecast for the second half (H2) of 2024, stating that producers would sell crude to local refineries.
However, the IPPG Chairman Abdulrazak Isa, raised concerns in a letter dated August 16, 2024, and addressed to the Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission, Gbenga Komolafe.
He said that the NNPC should utilise its allocated 445,000 barrels per day intervention crude oil volume to salvage the current situation as it did in many instances in the past, noting that where NNPC’s quota didn’t meet the demand, it should strictly be treated as export volumes.
