*Dangote Petroleum Refinery and Petrochemicals says the company has issued a tender for 11 million additional barrels of US crude oil over the next six months due to Nigerian crude oil producers’ inability to meet its feedstock requirements

Isola Moses | 绿帽献妻

Dangote Petroleum Refinery and Petrochemicals has issued a tender for an additional 11 million barrels of US crude oil over the next six months due to Nigerian crude oil producers’ inability to meet its feedstock requirements.

The Management of Dangote Oil Refinery, which stated this Friday, July 12, 2024, said the 650,000 barrels per day (bpd) refinery had already received nine million barrels of West Texas Intermediate crude from the US since the beginning of 2024 to offset unreliable domestic supplies.

The company noted the new tender, closing July 21, aims to procure two million barrels per month of WTI Midland crude for the world’s largest single-train facility located at Ibeju Lekki, Lagos, for the next six months starting August this year.

In a tender reported by Bloomberg, Dangote Refinery purchased five million barrels of West Texas Intermediate (WTI) Midland crude for delivery in the upcoming months of August and September. Additionally, the company initiated a tender process to acquire an additional six million barrels of American crude for September.

The company also stated: “This reliance on US crude highlights Nigeria’s challenges in meeting its own refining needs, attributed to issues, such as crude theft, aging infrastructure, and underinvestment, which have led to a decline in production.”

It stated that in April 2024, Nigeria’s daily output was only 1.45 million barrels, well below its capacity of 2.6 million barrels per day.

“The country recorded an estimated 30 million barrels underproduction in the first four months of 2024.

Dangote Refinery, crucial to Nigeria’s goal of becoming a net exporter of petroleum products, has found it necessary to import crude to sustain operations amidst insufficient domestic supply, said the company.

The statement further indicated that Aliko Dangote, President/CE of Dangote Group, stated during the Africa CEO Forum 2024 that the refinery would need to continue importing crude as production scales up and alternative supply contracts are sought.

Dangote was quoted to have said: “It also makes economic sense for us to tender for crude. If we could source 100 percent Nigerian crude, then fine, but we can鈥檛 wait.”

Commenting on the challenge with sourcing crude locally, Dangote added, “there is a bit of a problem for us to source the entire volume of crude that we鈥檙e looking for domestically because we need different types and mixes. Unless crude production improves 鈥� which we pray and hope for 鈥� we need to go elsewhere.”

According to the Group, the refinery took in more than 41 million barrels of feedstock in the first half of the year as it completed test runs and gradually increased processing rates, tanker-tracking data show.

Of that, about a quarter has been American supply, it said.

According to CAS, the refinery took delivery of 11 WTI cargoes, or 9 million barrels, between February and May, contrasting with around 18 million barrels of Nigerian crude deliveries.

The “Nigerian National Petroleum Company (NNPC), NNPC has struggled to meet its 300,000 barrels per day obligation to the refinery due to operational constraints,” Dangote Oil Refinery further stated.

International financial analytics corporation, S&P Global, recently described the Dangote Petroleum Refinery and Petrochemicals company as capable of resolving Nigeria鈥檚 foreign exchange (forex) issue and its huge pressure on the local Naira currency, while also catalysing the country鈥檚 economic development.

S&P Global, headquartered in Manhattan, New York City, disclosed this during an onsite visit to the refinery as part of its sovereign credit ratings assessment of Nigeria.

The team from the international rating agency were accompanied by officials from the Federal Ministry of Finance.

It stated S&P noted that the refinery would bolster Nigeria’s oil sector and, more importantly, also have a positive impact on its growing economy.

Currently operating at 350,000 barrels per day capacity, Vice President of Oil and Gas at Dangote Industries Limited (DIL), Devakumar Edwin, recently disclosed that the refinery would scale up to at least 500,000 barrels per day capacity by July/August, commencing the refining of petrol and ultra-low sulphur diesel.

Edwin explained the refinery, designed to process a wide range of crudes including various African and Middle Eastern crudes, as well as US Light Oil, conforms to Euro V specifications.

Besides, it is designed to comply with US EPA, European Union (EU) emission norms, the Department of Petroleum Resources (DPR) emission/effluent norms, and the African Refiners and Distribution Association (ARDA) standards.

Noting that most refineries were built by foreign companies, he said it is a thing of pride that a Nigerian company designed and built the world鈥檚 largest single-train refinery complex while acting directly as its own Engineering, Procurement, and Construction (EPC) contractor.

The conglomerate added: “The refinery, which also incorporates a self-sufficient marine facility capable of handling the world’s largest vessels, can meet 100% of Nigeria’s requirement of all liquid products (Gasoline, Diesel, Kerosene & Aviation Jet) and have surplus of each of these products for export.”

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