US Crude Accounts for 30% of 47 Cargoes Delivered to Dangote Refinery

The Dangote refinery, a key project poised to transform international crude flows, has imported 18 cargoes of US crude, accounting for 30% of its total deliveries, according to an August 1 report by S&P Global.

Operational since January, the 600,000 barrels per day (bpd) refinery, developed by Africa’s richest man, Aliko Dangote, aims to achieve self-sufficiency in fuel production for Nigeria. The facility, which has ramped up to 400,000 bpd in its initial six months, has been delivering various refined products including diesel, jet fuel, naphtha, and fuel oil to both domestic and export markets.

S&P Global highlighted that the refinery’s influence is already noticeable, with significant impacts on crude flows. Nigerian cargoes are increasingly retained domestically, while US WTI Midland crude is being imported to supplement supply. The report anticipates that petrol production will commence around mid-August.

The mega-refinery’s demand for light, sweet crude grades, primarily WTI and lighter Nigerian crudes, could tighten the market for these types of oil. A West African crude trader noted the potential for significant market disruptions once the refinery operates at full 600,000 bpd capacity without any WTI Midland.

The Dangote refinery has received a total of 47 cargoes to date, averaging around 170,000 bpd of Nigerian crude, including 20 from the Nigerian National Petroleum Company (NNPC) Limited. Long-term supply contracts have been secured for WTI Midland crude, which offers competitive pricing compared to Nigeria’s Bonny Light.

Challenges have emerged, particularly with foreign exchange issues causing delays for PetroChina vessels loaded with WTI Midland crude. These vessels have been idling near the refinery, highlighting the complexities of balancing domestic and imported crude supplies.

The refinery’s activities are influencing global markets, notably in Europe, which has traditionally been a major consumer of light, sweet Nigerian crude. S&P Global Commodities at Sea (CAS) data indicates a decline in European imports of Nigerian crude since January, with an increase in supplies from countries like Brazil, Egypt, Libya, and Guyana.

Nigeria has seen the largest increase in WTI Midland imports globally since the refinery’s inception, a shift that may impact Asia and Europe, the primary export markets for US crude. European imports of WTI Midland have surged by 20% over the past two years to fill the void left by sanctioned Russian oil.

Nigerian exports have steadily decreased, from 1.5 million bpd in Q4 2023 to 1.24 million bpd in Q2 2024. Despite rumors, the Dangote refinery recently denied allegations of reselling shipments of US and Nigerian crude.