By Adedapo Adesanya
Nigerian businessman with interests in oil, cement, and consumer goods, Mr Aliko Dangote, is planning to set up an oil trading arm, likely based in London.
According to reports, the establishment of the structure will help run crude and product supply for his new 650,000 barrels per day capacity refinery in Nigeria.
The move would reduce the role of the world’s biggest trading firms, which have been negotiating for months to provide the refinery with financing and crude oil in exchange for product exports.
The refinery is set to redraw global oil and fuel flows and the trading community is closely watching the way it will operate.
Reuters reported that trading houses — BP, Trafigura, and Vitol— among others have met Mr Dangote in Lagos and London in recent weeks to offer loans for $3 billion in working capital the refinery needs to buy large amounts of crude.
Although situated in Nigeria, the country has other arrangements that cannot make it sufficiently supply the refinery, so it has to source crude elsewhere.
The traders asked the refinery to repay loans with fuel exports but so far they have signed no deals as Mr Dangote, according to sources, worries they would reduce his control of the project.
This could potentially hurt the billionaire’s wealth as well.
Mr Dangote, Africa’s richest man, has also met considering government firms in his search for cash and crude.
The new trading team will be led by a key trader, Mr Radha Mohan, who joined Dangote in 2021 as Director of International Supply and Trading.
Recall that in May 2023, former President Muhammadu Buhari commissioned the refinery which took nearly a decade to complete and came in for $19.5 billion.
The plant has refined around 8 million barrels of oil between January and February and will take months to get to full capacity.
So far, Vitol has prepaid for some product cargoes to help the refinery buy crude, while Trafigura has swapped some crude oil in exchange for future fuel cargoes.
Modupe Gbadeyanka