By Adewale Sanyaolu with agency reports
Barring any last minute change in its decision, Dangote Oil Refinery says it has opened tenders for the purchase of two million barrels a month of West Texas Intermediate Midland(WTI) crude for 12 months starting in July,2024.
According to Bloomberg, Dangote refinery is seeking to buy millions of barrels of US crude over the next year in a bid to ramp up processing rates.
The development may not be unconnected with the inability of the Nigerian state to fully supply the refinery its daily crude oil demand occasioned by low oil production level, oil theft among other industry challenges.
The refinery which has since commenced production of Jet A1, diesel, LPFO, and fertiliser has been unable to go into production of Premium Motor Spirit (PMS), popularly called petrol.
OPEC in its latest monthly oil market released on Tuesday says Nigeria’s average daily crude oil production rose to 1.28 million barrels per day (bpd) in April from 1.23 million in March.
The report said the production data was based on direct communication with Nigerian authorities.
OPEC receives data on crude oil production from two sources: direct communication — which is from member countries — and secondary communication, such as energy intelligence platforms.
According to the report, the current output signifies a 4.07 percent increase from the 1.23 million bpd recorded in March — also indicating the first month-on-month production growth in the year.
Recall that on December 7, 2023, Dangote received its first crude oil cargo of 950,000 barrels to herald the production of petroleum products.
Though the chairman of Dangote Industries Limited, Aliko Dangote, had in a recent interview with Financial Times said the refinery is scaling down production to now begin with 350,000 barrels per day.
Quoting industry sources and tanker tracking data, S&P Global, in a report on its website, spglobal.com, said that the OTIS tanker, carrying a 950,000 barrel cargo of Nigeria’s Agbami crude, set sail on December 6 and is currently en route to Lekki, the nearest land port to Dangote’s offshore crude receiving terminal.
The tanker which berthed on December 7 around 8pm, marking the initiation of crude supplies for the refinery’s operations.
The Suezmax tanker, chartered by the state-owned Nigerian National Petroleum Company (NNPC), symbolises the initial crude supply to Dangote’s state-of-the-art refinery as it gears up to initiate production, revealed a West African oil trader familiar with the matter, the S&P report said.
Despite the refinery’s official completion in May, the lack of domestic crude feedstock had impeded oil product manufacturing. The NNPC, owning a 20 per cent stake in the refinery, recently entered an agreement to supply six million barrels of crude oil as feedstock to the Dangote refinery in December, aiming to jumpstart operations.
Agbami, operated by Chevron, stands as one of Nigeria’s major deepwater developments, boasting a daily output of approximately 100,000 b/d in the central Niger Delta. Renowned for its light sweet crude qualities with specific gravity measuring 47.9 API and sulphur content of 0.04%, Agbami yields significant proportions of naphtha and kerosene.
Further shipments from various Nigerian offshore fields to the refinery have been chartered by NNPC, signifying the beginning of a series of scheduled crude supplies throughout this month, according to the oil trader.
The Dangote Refinery, situated on the outskirts of Lagos, Nigeria’s commercial hub, has faced recurrent delays since its announcement in 2013, despite substantial installation progress made in 2019.
Designed to process multiple crudes concurrently, the refinery aims to process three Nigerian crude grades — Escravos, Bonny Light, and Forcados. Upon reaching full operational capacity, the facility is anticipated to produce a daily output of 327,000 b/d of gasoline, 244,000 b/d of gasoil/diesel, 56,000 b/d of jet fuel/kerosene, and 290,000 mt/year of propane/LPG.
The commencement of Dangote’s operations raises hope for Nigeria’s aspiration to reduce its reliance on gasoline imports, addressing the inadequacy of its existing refineries currently undergoing repairs. This anticipated shift is expected to transform Nigeria’s oil industry landscape, potentially leading to self-sufficiency in gasoline production by the 2040s.
While Dangote officials foresee an initial output of 370,000 b/d, primarily focusing on jet fuel and diesel production, industry analysts expect the refinery to achieve its full operational capacity around mid-2025, albeit with potential delays still looming.
