Dangote Refinery Resells Imported and Local Crude Amid Operational Challenges

Dangote Petroleum Refinery has begun reselling crude oil cargoes from both the United States and Nigeria due to technical challenges. Sources from Reuters revealed that this unusual decision for a refinery is linked to operational issues at the plant.

When questioned about these challenges and rumors of problems with the crude distillation unit (CDU), a Dangote executive affirmed that the CDU was operational.

The refinery, which commenced production in January 2024, is poised to become the largest in Africa and Europe once fully functional. It aims to transform Nigeria from a fuel importer to an exporter.

Despite its ambitious goals, recent developments indicate that the refinery is facing significant technical issues. The executive, however, maintained that the CDU remains in operation.

Cargoes of Nigerian Escravos and Forcados crude, along with U.S. WTI Midland crude, have been listed for resale, according to Reuters sources. Traders reported that the refinery has been importing several crude cargoes monthly.

Constructed at a staggering $20 billion by Africa’s richest man, Aliko Dangote, the 650,000-barrel-per-day refinery represents a monumental investment in Nigeria’s oil and gas industry. Dangote’s vision is to end Nigeria’s reliance on imported fuel, a persistent issue despite its status as Africa’s top oil producer.

The current scenario unfolds amid other strategic moves by the Dangote Group, including plans to list its refinery and a fertilizer subsidiary on the Nigerian stock exchange by early 2025. This listing aims to ease foreign exchange pressures on Nigeria’s economy.

The refinery has been importing significant volumes of U.S. crude, purchasing over 16 million barrels of West Texas Intermediate crude in 2024. This trend is expected to persist, with further imports planned for the upcoming months.

While the refinery’s objective is to satisfy Nigeria’s demand for refined petroleum products and create a surplus for export, the ongoing technical issues present a considerable obstacle.

Earlier this month, the Nigerian Upstream Petroleum Regulatory Commission reached an agreement with oil producers to supply crude oil to domestic refineries at market prices, resolving a prolonged supply dispute.