The Dangote Refinery is set to increase its crude oil imports from the United States (US), with plans to purchase at least 24 million barrels over the next year.
The move is part of the refinery’s efforts to ramp up its processing capabilities and meet its feedstock requirements.
According to a report by Bloomberg, the $20 billion refinery has issued a term tender for the purchase of 2 million barrels a month of West Texas Intermediate Midland (WTI) crude for 12 months starting in July.
The above amounts to a total of 24 million barrels of crude oil over the next year.
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Checks revealed that the decision to import US crude reflects Nigeria’s struggles to lift its own crude production, which remains well below theoretical capacity.
Despite being a major oil producer, Nigeria has not been able to meet its Organization of Petroleum Exporting Countries (OPEC)+ quota for at least a year.
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The nation’s oil production has been hindered by various factors, including crude theft, aging oil pipelines, low investment, and divestments from oil majors operating in the country.
To address the issue of domestic supply, Nigeria’s upstream regulator, the Nigeria Upstream Petroleum Regulatory Commission (NUPRC), recently released new draft rules that will compel oil producers to sell crude to domestic refineries.
Under the new rules, NUPRC will act as an intermediary between local refiners and producers when agreements on crude supply are not reached, facilitating a sales purchase agreement using a willing-buyer, willing-seller model.
The Dangote Refinery, which is currently running at about half capacity, is taking advantage of cheaper US oil imports to meet its feedstock requirements.
Since the start of 2024, it has received at least one supertanker carrying about 2 million barrels of WTI Midland each month.
According to Elitsa Georgieva, Executive Director at Citac, an energy consultancy specializing in the African downstream sector;
“Supply of Nigerian crude is insufficient or unavailable and sometimes unreliable. WTI on the other hand, is available, with reliable supply and competitively priced.
“Buying different feed stocks also provides flexibility and optionality for the refinery, so the tender makes economic sense for Dangote.”
