Business
Dangote Refinery to buy 24m barrels of crude from US
Dangote Refinery is set to buy at least 24 million barrels of US crude over the next year as it ramps up its processing capabilities.
A report by Bloomberg revealed that the $20 billion refinery has issued a term tender for the purchase of 2 million barrels a month of West Texas Intermediate Midland (WTI) crude for 12 months starting in July, which amounts to 24 million barrels of crude in one year.
The call for US oil reflects Nigeria’s struggle to lift its own crude production, which remains well below theoretical capacity, as well as Dangote’s willingness to tap cheaper supplies than it can find at home. It also highlights how influential the refinery will be in global crude and fuel trading.
Elitsa Georgieva, Executive Director at Citac, an energy consultancy specializing in the African downstream sector, said: “Supply of Nigerian crude is insufficient or unavailable and sometimes unreliable. WTI on the other hand, is available, with reliable supply and competitively priced.
“Buying different feed stocks also provides flexibility and optionality for the refinery, so the tender makes economic sense for Dangote,”
READ ALSO: Again, Dangote reduces diesel, aviation fuel prices to N940, N980
Nigeria has not been able to meet its Organization of Petroleum Exporting Countries (OPEC) + quota for at least a year. The nation pumped about 1.45 million barrels a day of crude and liquids in April, still far below its estimated production capacity of 2.6 million barrels a day.
Crude theft, aging oil pipelines, low investment, and divestments from oil majors operating in the country have all contributed to declining production.
To ensure enough local supply to the 650,000 barrel-a-day refinery, Nigeria’s upstream regulator, the Nigeria Upstream Petroleum Regulatory Commission (NUPRC), released new draft rules last month that will compel its oil producers to sell crude to domestic refineries. NUPRC mandated all oil companies in Nigeria to supply crude to domestic refineries that are unable to procure it locally.
Producers are allowed to export crude only after meeting these domestic supply obligations.
Under the new rules, NUPRC will act as an intermediary between local refiners and producers when agreements on crude supply are not reached, facilitating a sales purchase agreement using a willing-buyer, willing-seller model.
-
Politics7 days ago
Gov. Diri Totally Committed To Bayelsa’s Development, Growth, And Progress; George Turnah Tells Visiting Ogbia Ward 9 PDP Executives And Stakeholders
-
News6 days ago
There Is No Worker In Level 1 Step 1 Today In Nigeria, We Only Have Workers From Level 4 – Joe Ajaero
-
Niger Delta6 days ago
Ex-Niger Delta Militant Hails Tinubu’s Reforms, Seeks Intensified Security Of Oil Installations
-
Politics6 days ago
JUST-IN: Reinstated Edo State Deputy Governor, Philip Shaibu Kneels For Oshiomhole After Dumping PDP For APC
-
News4 days ago
NYSC Member Allegedly Impregnates 5 Secondary School Students in Sokoto
-
Sports6 days ago
Chelsea offered TWO elite strikers as Victor Osimhen ‘agrees’ transfer
-
Business4 days ago
UPDATE: How NNPC Spent N7.3Billion On Entertainment In 16 Months NNPCL GMD, Mele Kyari
-
News4 days ago
Police Sergeant Shoots Father Dead After Drinking To Stupor