Dangote Petroleum Refinery and Petrochemicals said on Friday that it has issued a tender for an additional 11 million barrels of US crude oil over the next six months.
In a statement, the refinery said the fresh order was due to the inability of Nigerian crude oil producers to meet its feedstock requirements.
It said the 650,000 barrels per day refinery has already received nine million barrels of West Texas Intermediate crude from the US since the beginning of 2024 to offset unreliable domestic supplies.
According to the statement, the new tender, closing on July 21, aims to procure two million barrels per month of WTI Midland crude for the world’s largest single-train facility located in Ibeju Lekki, Lagos, for the next six months starting in August.
In a tender reported by Bloomberg, Dangote Refinery purchased five million barrels of West Texas Intermediate (WTI) Midland crude for delivery in the upcoming months of August and September.
Additionally, the company initiated a tender process to acquire an additional six million barrels of American crude for September.
“This reliance on US crude highlights Nigeria’s challenges in meeting its own refining needs, attributed to issues such as crude theft, aging infrastructure, and underinvestment, which have led to a decline in production.
“In April, Nigeria’s daily output was only 1.45 million barrels, well below its capacity of 2.6 million barrels per day.
“The country recorded an estimated 30 million barrels underproduction in the first four months of 2024.
“Dangote Refinery, crucial to Nigeria’s goal of becoming a net exporter of petroleum products, has found it necessary to import crude to sustain operations amidst insufficient domestic supply,” it said.
President of Dangote Group, Aliko Dangote, had stated during the Africa CEO Forum 2024 that the refinery will need to continue importing crude as production scales up and alternative supply contracts are sought.
“It also makes economic sense for us to tender for crude. If we could source 100 per cent Nigerian crude, then fine, but we can’t wait,” said Dangote.
Commenting on the challenge with sourcing crude locally, Dangote added, “there is a bit of a problem for us to source the entire volume of crude that we’re looking for domestically because we need different types and mixes.
“Unless crude production improves – which we pray and hope for – we need to go elsewhere.”
The refinery took in more than 41 million barrels of feedstock in the first half of the year as it completed test runs and gradually increased processing rates, tanker-tracking data show.
Of that, about a quarter has been American supply.
According to CAS, the refinery took delivery of 11 WTI cargoes, or 9 million barrels, between February and May, contrasting with around 18 million barrels of Nigerian crude deliveries.
Nigerian National Petroleum Company (NNPC), NNPC has struggled to meet its 300,000 barrels per day obligation to the refinery due to operational constraints.
International financial analytics corporation, S&P Global, recently described the Dangote Petroleum Refinery and Petrochemicals company as capable of resolving Nigeria’s foreign exchange (forex) issue and its huge pressure on the local Naira currency, while also catalysing the country’s economic development.
S&P Global, headquartered in Manhattan, New York City, disclosed this during an onsite visit to the refinery as part of its sovereign credit ratings assessment of Nigeria.
The team from the international rating agency were accompanied by officials from the Federal Ministry of Finance.
S&P noted that the refinery would bolster Nigeria’s oil sector and, more importantly, also have a positive impact on its growing economy.
Currently operating at 350,000 barrels per day capacity, Vice President of Oil and Gas at Dangote Industries Limited (DIL), Devakumar Edwin, recently disclosed that the refinery would scale up to at least 500,000 barrels per day capacity by July/August, commencing the refining of petrol and ultra-low sulphur diesel.
He noted that the refinery, designed to process a wide range of crudes, including various African and Middle Eastern crudes, as well as US Light Oil, conforms to Euro V specifications.
In addition, it is designed to comply with US EPA, European Union (EU) emission norms, the Department of Petroleum Resources (DPR) emission/effluent norms, and the African Refiners and Distribution Association (ARDA) standards.
While noting that most refineries were built by foreign companies, he said it is a thing of pride that a Nigerian company designed and built the world’s largest single-train refinery complex while acting directly as its own Engineering, Procurement, and Construction (EPC) contractor.
The refinery which also incorporates a self-sufficient marine facility capable of handling the world’s largest vessels, can meet 100% of Nigeria’s requirement of all liquid products (Gasoline, Diesel, Kerosene & Aviation Jet) and have surplus of each of these products for export. (vitalnewsngr.com)
