Dangote refinery resorts to U.S WTI as NNPC fails to meet its crude needs

The Dangote Refinery and Petrochemicals Company in Lagos has started importing crude oil from the United States of America after the Nigerian National Petroleum Company Limited’s (NNPC) failed to meet its required crude needs to start full operations.

According to Bloomberg, Trafigura Group sold 2 million barrels of WTI Midland to the Dangote refinery for delivery by the end of February, quoting traders’ familiar with the transation.

The new 650,000 barrel-a-day oil refinery commenced operations earlier in January, hoping to source crude locally through a supply agreement with the trading arm of the state-owned NNPCL.

However, out of the first six million barrels it received between December 2023 and January 2024, only 1 million barrels were supplied by NNPC, with the remaining 5 million barrels coming from a trading unit of Shell and other International Oil Companies (IOCs) operating in the country, Business Hallmark reliably gathered.

According to Bloomberg, the decision of the Nigerian National Petroleum Company Limited’s (NNPC) to mortgage a total of 440,000 barrels of crude oil per day (bpd) to secure cash deals is preventing it from fulfilling its crude oil supply deal with Dangote Refinery.

Nigeria’s erratic crude oil production levels, according to sources, might be responsible for Dangote refinery’s decision to look elsewhere for consistency in crude oil supply.

Nigeria has been battling shortage in crude oil production in the past few years occasioned by rising incidents of crude oil theft, divestment from oil majors and insecurity across the Niger Delta.

Nigeria has failed to meet its OPEC production quota of 1.75 mbpd for 2023, necessitating the oil cartel to cut its production quota for 2024 to 1.5 millions barrels per day.