Dangote Refinery Buys More US Crude Oil Ahead of Local Petrol Supply

By Adedapo Adesanya

Dangote Refinery has purchased 5 million barrels of US crude oil, scheduled for delivery next month and in September, as it plans to roll out its Premium Motor Spirit (PMS) also known as petrol.

Bloomberg reported that the refining company has also initiated a tender process to buy an additional 6 million barrels of American crude for September.

This development came after the refinery purchased over 16 million barrels of West Texas Intermediate (WTI) crude oil this year.

The report suggested that the proportion of US crude purchases may increase in August and September, according to tenders for new supply.

“For Nigeria and Dangote, the use of US crude likely reflects where there are spare barrels available to buy in the world and the most competitive price,” the report reads.

“The refinery has been billed as a way of helping Nigeria wean itself off foreign fuel supplies. The refinery near Lagos mostly runs on local crude supplies that can reach the plant from offshore terminals in as little as a couple of days.”

Tracking data showed that the refinery received more than 41 million barrels of feedstock in the first half of the year as it completed test runs and steadily increased processing rates. According to Bloomberg, American supply accounts for around one-quarter of that total.

With this current acquisition, the inflows of American feedstock may expand dramatically. In May, the refinery announced plans to import 24 million barrels of petroleum from the United States for more than a year.

This action is seen as a strategic step towards lowering Nigeria’s reliance on foreign petroleum supply while increasing domestic refining capability. The Dangote Refinery, in Lagos, is projected to play an important part in meeting this target.

Last weekend, Mr Devakumar Edwin, Vice President of Oil and Gas at Dangote Industries Limited (DIL), confirmed that Dangote Refinery would begin production of petrol this month as earlier planned.

Mr Edwin said this during a visit to the Dangote Refinery in Ibeju-Lekki, Lagos, by representatives from the worldwide financial analytics organisation S&P Global as part of its sovereign credit rating review of Nigeria.

According to him, the move would use Africa’s enormous crude oil resources to make refined goods domestically and hopes to spark a virtuous cycle of industrial growth, job creation, and economic success.