The Dangote refinery is gearing up to import crude oil from the United States in the coming months, a shift highlighting the growing competitiveness of American barrels in the global market, as reported by Bloomberg. Traders familiar with the situation revealed that Trafigura Group has secured a deal to supply 2 million barrels of WTI Midland to the Dangote refinery by the end of February. This marks a significant departure for the refinery, which has traditionally relied on Nigerian crude.
The surge in US oil supply over the past decade has reshaped the global market, impacting regions like Asia and affecting economies heavily dependent on petroleum exports, such as Nigeria. The recently launched 650,000 barrel-a-day refinery, initially targeting a processing rate of 350,000 barrels per day, aims to gradually increase production toward its full capacity.
While the refinery primarily sources domestic crude through an agreement with the state-owned NNPCL's trading arm, it recently diversified its feedstock by receiving shipments of Nigeria's Agbami crude, facilitated by a Shell trading unit. The facility, capable of processing various African crudes, is now extending its reach to include supplies from distant sources like the US and Saudi Arabia.
Nigeria has faced challenges in crude oil production due to incidents of theft, divestment from oil majors, and insecurity in the Niger Delta. The country has struggled to meet its OPEC production quota, leading to a reduction in the quota for 2024. The Dangote refinery's exploration of alternative crude oil sources may be attributed to Nigeria's inconsistent production levels.