Nigeria’s giant new oil refinery Dangote, the largest in Africa, is set to import crude from the US in the coming months, a sign of just how competitive American barrels have become in the global market.
Trafigura Group sold 2 million barrels of WTI Midland to Dangote refinery for end-February delivery, said traders with knowledge of the matter. This is the first time that the giant refinery has purchased non-Nigerian crude, traders said.
Booming US oil supply over the past decade or so has transformed the global market, reaching as far afield as Asia. Nigeria’s economy is dependent on petroleum exports, meaning the deliveries from across the Atlantic are telling.
The new 650 000 barrel-a-day oil refinery, owned by Aliko Dangote, Africa’s richest person, started operations earlier this month. It is targeting an initial processing rate of 350 000 barrels a day before ramping up toward its full capacity.
The refinery is sourcing domestic crude under a supply deal with the trading arm of the state company Nigerian National Petroleum Co The first cargo that arrived at the plant last month was Nigeria’s Agbami crude, sold by a trading unit of Shell. This was followed by more Nigerian barrels including the nation’s Amenam, Bonny Light and CJ Blend streams.
As well as processing domestic feedstock, the new giant plant is equipped to run other African crudes as well as supply from further afield including the US and Saudi Arabia, Dangote Group said earlier this month.
It’s not clear why a refinery in a large oil producing country is buying from the US, but price is likely a factor, according to traders. West Texas Intermediate Midland barrels tend to be cheaper than grades like Nigeria’s, which are priced relative to the North Sea grade Brent.
The refinery is expected to start gasoline production by March, local newspaper The Guardian reported at the weekend, quoting Dangote himself.