PetroChina Struggles to Unload U.S. Crude at Dangote’s Nigerian Refinery

Date:

Chinese state energy giant PetroChina has faced challenges unloading a cargo of U.S. crude at Nigeria’s new refinery, with payment issues causing a nearly month-long delay, as reported by four trading sources and shipping data. The refinery, funded by Africa’s wealthiest individual, Aliko Dangote, aims to become the largest on the continent and in Europe upon reaching full capacity this or next year, yet its progress has been hindered by difficulties in operations and financing.

Thank you for reading this post, don't forget to subscribe!

**Refinery Challenges and Payment Hurdles**

The refinery, with a $20 billion investment, seeks to reverse Nigeria’s dependence on fuel imports by maximizing domestic refining capacity. However, the current impasse with PetroChina underscores the complexities involved. The 2-million-barrel cargo of West Texas Intermediate (WTI) crude, stranded off Nigeria since March 28, awaits processing due to delayed payment processes. Despite efforts to facilitate the transaction, including the issuance of a letter of credit, challenges persist, with PetroChina reluctant to accept oil products as payment.

Financial Strains and Government Involvement

Accessing dollars has been a challenge for the refinery, compounded by the devaluation of the naira against the U.S. dollar amidst rising global oil prices. While the Nigerian government’s involvement could alleviate some of these challenges, responses to inquiries regarding the issue were not immediately available.

Operational Implications and Supply Chain Dynamics

The delayed cargo and payment terms have ripple effects on the refinery’s operations and its supply chain. With another 2 million barrels of WTI crude en route, unresolved payment terms pose ongoing challenges. Potential sellers of U.S. WTI crude are faced with demanding credit terms or the exchange of refined products, deviating from typical industry practices.

Navigating Business Dynamics

Dangote Group Executive Edwin Devakumar emphasizes the importance of seeking favorable terms in business dealings, highlighting ongoing negotiations and the pursuit of the best possible deals. While the refinery has ramped up operations to half its designed capacity, further expansion is hindered by the need for substantial working capital, necessitating continued negotiations and financial arrangements.

Supply Chain Dynamics and Supplier Network

Despite challenges, the refinery continues to receive crude oil shipments, with Trafigura, Mercuria, Vitol, Shell, and NNPC among its suppliers. However, achieving the desired refining capacity remains a priority, with the refinery importing approximately 10 crude oil cargoes per month, representing half its targeted capacity.

Conclusion
The challenges faced by PetroChina and the Dangote refinery underscore the complexities of operating in the energy sector, particularly in emerging markets. Resolving payment issues and optimizing operational efficiency will be critical for the refinery’s success and its broader impact on Nigeria’s energy landscape.


Discover more from Naija247news

Subscribe to get the latest posts to your email.

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.

Share post:

Subscribe

Popular

More like this
Related

Okomu Oil Seeks Govt, Stakeholders Support Amidst Bandits Attacks

May 25, 2024. Azonuchechi Chukwu. The management of Okumu Oil Palm...

Investors Lose N290bn as NGX Delists Arbico Plc

May 25, 2024. Azonuchechi Chukwu. The Nigerian Exchange Ltd. (NGX) says...

20 States in United States remove degree requirements from government jobs

Over the past two years, more than 20 states...

“I did not announce a ban on smoking and ritual scenes in movies – NFCVB Chief

May 25, 2024. Azonuchechi Chukwu. The Executive Director of the National...

Discover more from Naija247news

Subscribe now to keep reading and get access to the full archive.

Continue reading