Nigeria: Dangote Refinery explores alliances with Libya, Angola to secure crude oil supply

In an effort to overcome the challenges posed by domestic crude oil supplies, Nigeria’s Dangote Refinery, Africa’s largest refinery built by billionaire Aliko Dangote, is engaged in talks with Libya and Angola to secure the necessary crude for its 650,000 barrels per day (bpd) facility.

The $20 billion refinery, situated on the outskirts of Lagos, was constructed with the aim of reducing Nigeria’s reliance on imported fuels due to inadequate refining capacity.

Since its commencement in January, Dangote Refinery has faced difficulties in obtaining sufficient domestic crude supplies. Nigeria, despite being the largest oil producer in Africa, grapples with issues such as theft, pipeline vandalism, and inadequate investment in the oil sector. Consequently, Dangote Refinery has resorted to importing crude from distant locations like Brazil and the United States.

Devakumar Edwin, a senior executive at Dangote Refinery, revealed that they are currently in discussions with Libya about importing crude and intend to engage with Angola and other African countries as well. While Edwin did not provide specific details about the talks, he mentioned that international traders and oil companies, including Trafigura, Vitol, BP, and TotalEnergies, are among the primary buyers of Dangote’s gasoil, with a significant portion being exported.

In recent months, Dangote has witnessed an increase in gasoil exports to West Africa, effectively capturing market share from European refiners. To manage supplies and facilitate product sales, Dangote has established an operational oil trading arm with teams based in London and Lagos.

However, the refinery has faced regulatory challenges from Nigeria’s upstream regulator regarding the sulphur content in its gasoil. The regulator claims that the sulphur level exceeds the required limits of 200 parts per million (ppm). Aliko Dangote has refuted these claims, stating that while the sulphur level was initially higher during the early stages of production, it has already fallen to 88 ppm and is projected to reach 10 ppm by early August as output increases.

The ongoing efforts by Dangote Refinery to secure reliable crude oil supplies are crucial in ensuring the refinery’s sustained operations and Nigeria’s progress towards self-sufficiency in fuel production. By forging alliances with Libya and Angola, Dangote Refinery aims to mitigate the challenges posed by domestic supply constraints and contribute to the growth of Nigeria’s oil industry.