Wednesday, 12 June, 2024

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Dangote refinery to buy 24m barrels of crude oil from US


Dangote refinery plans to buy 24 million barrels of crude from the United States over the next year as it increases processing rates.

According to a report on Thursday by Bloomberg, the plant issued a “term tender” for the purchase of two million barrels of West Texas Intermediate (WTI) Midland crude a month.

The delivery, according to a document the report cited, is for 12 months (24 million barrels), commencing in July.

The tender, the document revealed, would close on May 21.

According to the report, the call for US oil shows how influential the plant will be in global crude and fuel trading. 

“It also reflects Nigeria’s struggle to lift its own crude production, which remains well below theoretical capacity, as well as Dangote’s willingness to tap cheaper supplies than it can find at home,” the publication said.

Meanwhile, Nigeria has been unable to meet its Organisation of Petroleum Exporting Countries (OPEC) quota.

In April, the country pumped about 1.45 million barrels per day (bpd) of crude and condensates — below its estimated production capacity of 2.6 million barrels a day.

Crude theft, ageing oil pipelines, low investment, and divestments from oil majors operating in the nation are contributory factors to declining production, according to the report.

The publication said the plant is “currently running at about half capacity” and “is taking advantage of cheaper US oil imports for as much as a third of its feedstock”.“Since the start of this year, it has received at least one supertanker carrying about 2 million barrels of WTI Midland each month,” Bloomberg said.The report said an official at Dangote declined to comment.On April 15, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) released new draft rules requiring oil producers to sell crude to domestic refineries before meeting foreign demands.Only recently, the Nigerian government announced it will not fix prices for the new Dangote Refinery, leaving the company’s rates to be determined commercially.

Farouk Ahmed, the Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), gave the assurance.

Credit: Nigerian Tribune

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