Nigeria’s Dangote Refinery seeks new crude suppliers in Africa

Nigeria’s Dangote Refinery, the largest oil refinery in Africa, is broadening its search for crude oil supplies beyond Brazil. The refinery is currently in discussions with Libya and exploring options in Angola for its 650,000 barrels per day (bpd) facility.

Built by Africa’s wealthiest man, Aliko Dangote, the $20 billion refinery is located on the outskirts of Lagos. It aims to end Nigeria’s reliance on imported fuels, addressing the country’s insufficient refining capacity.

Since beginning operations in January, the refinery has faced challenges in securing adequate crude supplies within Nigeria. Despite being Africa’s top oil producer, Nigeria struggles with issues like theft, pipeline vandalism, and low investment. These problems have forced Dangote to import crude from distant sources, including Brazil and the United States.

Devakumar Edwin, a senior executive at Dangote Refinery, declined to provide details about the ongoing talks. However, he mentioned that international traders and oil companies are among the major buyers of Dangote’s gasoil, much of which is exported.

“The biggest offtakers are the two big traders, Trafigura and Vitol, along with BP and, to some extent, even TotalEnergies. But all of them are taking it offshore,” Edwin said.

Traders and shipping data indicate that Dangote is increasing its gasoil exports to West Africa, capturing market share from European refiners.

Edwin also noted that Dangote’s oil trading arm is operational, with staff based in London and Lagos, to help manage supplies and sell products.

Nigeria’s upstream regulator has had disputes with Dangote, citing that the sulphur content in its gasoil exceeds the required limits of 200 parts per million (ppm). Aliko Dangote refuted this claim, stating that the sulphur level was higher when production began but has since decreased to 88 ppm and is expected to drop to 10 ppm by early August as production increases.