Nigeria’s Dangote Oil Refinery Criticized Over Purchase of US Crude
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Nigeria’s recently acquired 2 million barrels of crude from the US for its new mega refinery has sparked inquiries into why the petro-state isn’t utilizing its own oil reserves to fuel the expansive plant.
The Dangote oil refinery, boasting a daily capacity of 650,000 barrels which is owned by Aliko Dangote, Africa’s wealthiest individual, was anticipated to mark the end of the nation’s practice of exporting crude for processing abroad and its reliance on expensive foreign fuel.
Despite widespread coverage in Nigerian media, with some questioning the decision. It is worth noting that Dangote has also been sourcing from local supplies. Bloomberg reported that Trafigura Group sold 2 million barrels of WTI Midland to Dangote refinery for end-February delivery.
Sourcing crude from outside of Nigeria has always been a possibility, according to Elitsa Georgieva, executive director at Citac, an energy consultancy specializing in the African downstream sector.
“However, given the proximity to local crude fields and the fiscal efficiencies of sourcing domestic crudes, there would need to be significant economic incentives to drive the processing of foreign crudes,” she said.
The Dangote refinery, which has a capacity of 650,000 barrels per day, is expected to help Nigeria reduce its reliance on imported fuel. The refinery is currently in the process of ramping up production, and it is expected to reach full capacity by the end of 2024.
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