The Dangote Refinery has announced plans to acquire an additional 11 million barrels of crude oil from the United States.
In a tender viewed by Bloomberg, Dangote Refinery purchased five million barrels of West Texas Intermediate (WTI) Midland crude for delivery next month and in September.
The company has also initiated a tender process to buy another six million barrels of American crude for September.
Despite its reliance on local crude supplies, the refinery near Lagos has been forced to seek imports to sustain its operations.
With the ability to source crude from offshore terminals in just a few days, the refinery took in over 41 million barrels of feedstock in the first half of the year.
Notably, about a quarter of this amount was sourced from the United States.
Aliko Dangote, Chairman of Dangote Group, explained the necessity of importing crude oil as the refinery scales up production and explores alternative supply contracts.
“It makes economic sense for us to tender for crude. If we could source 100 percent Nigerian crude, then fine, but we can’t wait,” Dangote stated at the Africa CEO Forum 2024.
He further said it is important for a mix of different crude types to optimize operations, given the current limitations in domestic production.
The refinery’s recent acquisition contrasts with its earlier deliveries, which included 11 WTI cargoes, or nine million barrels, between February and May, alongside approximately 18 million barrels of Nigerian crude.
This move to secure a longer-term offtake agreement indicates a commitment to diversifying crude sources, particularly during a period of weak demand for Nigerian supply.
The Nigerian National Petroleum Company (NNPC), which holds a 20 percent equity stake in the refinery, has faced difficulties meeting its 300,000 barrels per day (bpd) crude oil obligation.
In June, Nigeria’s crude output was around 1.28 million barrels per day, significantly below its estimated production capacity of 2.6 million barrels per day.
Factors such as crude theft, aging oil pipelines, low investment, and divestments by major oil companies have all contributed to declining production.
Despite various assurances from the federal government and the NNPC about meeting the country’s OPEC quota, Nigeria recorded an estimated 30 million barrels of underproduction in the first four months of 2024.
Efforts to curb insecurity in the Niger Delta, where Nigeria’s oil is extracted, have included a multi-billion-naira contract with local security groups and substantial spending on official security agencies. Nonetheless, oil theft, asset vandalism, and sabotage remain rampant in the region.
