The Dangote Refinery is set to buy at least 24 million barrels of US crude oil in the next year to boost its processing capabilities. The $20 billion facility has issued a tender for 2 million barrels of West Texas Intermediate (WTI) crude each month, starting in July, according to a Bloomberg report.
This move highlights Nigeria’s struggle to ramp up its own crude production, which remains well below potential. The Dangote Refinery’s decision to import cheaper, reliable US oil underscores its significant role in the global crude and fuel markets.
Elitsa Georgieva, Executive Director at Citac, an African downstream energy consultancy, commented, “Nigerian crude supply is often insufficient, unavailable, or unreliable. WTI offers a reliable and competitively priced alternative.”
Nigeria has missed its OPEC+ production quotas for over a year, with April output at 1.45 million barrels per day, far below the 2.6 million capacity. Problems such as crude theft, aging infrastructure, low investment, and oil majors’ divestments have contributed to this shortfall.
To address these issues, the Nigeria Upstream Petroleum Regulatory Commission (NUPRC) has proposed new rules requiring oil producers to sell crude to domestic refineries before exporting any excess. This policy aims to support local facilities like the Dangote Refinery, which processes 650,000 barrels per day and has been relying on US imports due to local supply shortages.
These new regulations could help Dangote secure more domestic crude, aligning with Nigeria’s efforts to enhance its refining sector.