Stack towers at the under-construction Dangote Industries Ltd. oil refinery and fertilizer plant site in the Ibeju Lekki district, outside of Lagos, Nigeria, on Friday, March 6, 2020. Aliko Dangote, Africas richest man, plans to spend more than his net worth of $13.5 billion building one of the worlds biggest oil refineries. Photographer: Tom Saater/Bloomberg Oil prices were pressured last month on reports that the plant planned on re-selling some of the US barrels it previously purchased, underscoring the pivotal role Dangote already plays within Atlantic basin petroleum markets. The refinery’s efforts to dial back overseas crude purchases potentially leave more US export barrels competing for buyers elsewhere.
The pivot could even gather pace in the coming months. From October, the Nigerian government is starting a new system in which Dangote will be able to purchase crude in the local currency. The plan could involve as much as 445,000 barrels a day of the nation’s crude.
It’s not yet certain how much supply will be traded under the system but if used to its limit, the process could leave Dangote requiring hardly any overseas crude.
The refinery — near the nation’s commercial hub Lagos — has taken in more than 56 million barrels of crude since December as it completed test runs and gradually lifted processing. Of that, 78% has been local supply.
A senior Dangote official declined to comment on the refinery’s future crude-procurement plans.
It took six cargoes of crude directly from state oil company Nigerian National Petroleum Co. for next month, a company spokesman said earlier this month. Most Nigerian cargoes are about one million barrels each. A further two shipments from Nigeria as well as two million barrels of WTI Midland are slated for September arrival, the tanker-tracking data show.
The plant will have taken in an average of almost 10 million barrels per month in the six months through September.
Inflows of American feedstock had been expected to increase significantly earlier in the summer.
However some of the US barrels it bought for this month and next were being resold, an official at Dangote Industries said in late July. It also scrapped two tenders in which it had been looking to purchase a further 6 million barrels of American crude for September, according to traders.
The changes may also leave fewer Nigerian barrels on offer for sale into Europe and Asia.