Dangote refinery may import crude from Trafigura and Vitol as Nigeria’s output dwindles

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Refinery is one of Nigeria’s single largest investments

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Low crude production a threat to refinery supplies

Refinery seen changing Atlantic basin gasoline market

LAGOS, May 22 – Dangote refinery may import crude from traders like Trafigura and Vitol, Emmanuel said, at a time local refining was expected to save foreign exchange and keep prices lower.

CRUDE SUPPLY ISSUES
Dangote expects to begin refining crude in June but London-based research consultancy Energy Aspects said commissioning was an intricate process and expects operations to start later this year, reaching 50-70% next year, with a staggered process of other units into 2025.

The refinery needs a constant supply of crude but Nigeria’s oil production has been declining due to oil theft, vandalism of pipelines and underinvestment. In April, production fell under 1 million bpd, below Angola’s output.

Lower production would affect state-owned oil company NNPC Ltd’s ability to fulfil an agreement to supply Dangote refinery with 300,000 bpd of crude, said economist Kelvin Emmanuel, who authored a report on oil theft last year.

NNPC, with a 20% stake in the refinery, has production sharing agreements with oil majors like Exxon Mobil, Shell and Eni and is entitled to a portion of the crude, which it also swaps with traders for petrol and diesel.

The refinery has not signed an agreement to buy from oil majors in Nigeria.

Meanwhile Nigeria commissioned Dangote Refinery on Monday amid hopes of transforming the country into a net exporter of petroleum products, but analysts said securing crude supplies could affect it achieving full production this year.

The government of outgoing President Muhammadu Buhari sees the refinery as the answer to Nigeria’s repeated fuel shortages, the latest of which hit the country in the run up to February’s disputed presidential election.

Nigeria spent $23.3 billion last year on petroleum product imports and consumes around 33 million litres of petrol a day. Dangote’s 650,000 barrels per day refinery plans to produce 53 million litres a day.

The plant plans to export the surplus petrol, turning Africa’s biggest oil producer into an export hub for petroleum products. It also plans to export diesel, according to Aliko Dangote, Africa’s richest man, who funded the refinery’s construction.

The massive petrochemical complex is one of Nigeria’s single largest investments. The refinery cost $19 billion to build after years of delay – above initial estimates of between $12 billion and $14 billion – and has outstanding debt of around $2.75 billion, according to Nigeria’s central bank governor.

The complex also has a 435 megawatt power station, deep seaport and fertiliser unit.

Speaking at the commission ceremony, Dangote said the priority was to ramp up production to ensure the refinery could fully satisfy Nigerian demand and eliminate “the tragedy of import dependency.”

The ceremony attended by Buhari and four other presidents from the region.

Energy Aspects, however, said in the long run, the Dangote refinery could end Nigeria’s gasoline deficit, reshape the Atlantic basin gasoline market and export diesel that meets European Union specifications.

Godwin Okafor
Godwin Okaforhttps://naija247news.com
Godwin Okafor is a veteran Financial Journalist, Internet Social Entrepreneur, and the visionary Founder of Naija247news Media Limited. With an extensive career spanning over 16 years in financial journalism, Godwin possesses a wealth of experience that seamlessly bridges both traditional and digital media landscapes. His journey in journalism commenced at Business Day, Nigeria, where he laid the foundation for his prolific career. In 2010, Godwin took a bold step by founding Naija247news Media, a platform that has since become a prominent player in delivering timely and accurate news. Educationally, Godwin Okafor holds a Bachelor's degree in Industrial Relations and Personnel Management from the prestigious Lagos State University, Ojo, Lagos. His commitment to continuous learning led him to the Lagos Business School, where he further honed his skills. Additionally, he is recognized as a Fellow of the University of Pennsylvania, having successfully completed the Wharton Seminar for Business Journalists. Throughout his illustrious career, Godwin has earned acclaim by winning numerous journalism awards, a testament to his dedication to excellence in reporting. Beyond his role as a Financial Journalist, Godwin Okafor wears the hat of the Chairman at Emmerich Resources Limited, the publishing entity behind Naija247news. His visionary leadership has played a pivotal role in shaping the media landscape and establishing Naija247news as a trusted source of information. Godwin Okafor's multifaceted expertise, commitment to journalistic integrity, and leadership in the realm of business journalism underscore his influential presence in both the media and entrepreneurial spheres.

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