DANGOTE REFINERY IMPORTS CRUDE AMIDST LOAN-FOR-OIL DEALS

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The Dangote Petroleum Refinery, set to commence operations in October, has disclosed that it is presently importing crude oil, with expectations of its first cargo in two weeks, according to Devakumar Edwin, Executive Director of Dangote Group. While the Nigerian National Petroleum Company Limited (NNPCL) usually handles crude trading on behalf of Nigeria, Edwin revealed that NNPCL had already committed its crude to other entities, though the specific recipients were not disclosed.

The delay in meeting Dangote’s crude needs arose from NNPCL’s engagement in various crude oil contracts, including a notable $3 billion crude-for-loan deal with the African Export-Import Bank. This agreement allows NNPCL to allocate future oil production to the bank as loan repayments.

Edwin assured that the importation of crude by Dangote Refinery is a temporary measure, as the firm is slated to receive its supply from NNPCL starting November. The refinery is poised to produce up to 370,000 barrels of crude per day by October 2023, yielding Automotive Gas Oil and jet fuel. Premium Motor Spirit, or petrol, is expected to be in production by November 30, 2023.

However, it’s anticipated that the prices of diesel and jet fuel will only witness a decline when Dangote Refinery begins sourcing crude oil locally rather than through imports. Edwin affirmed that the refinery aims to gradually increase petrol production, aiming for an impressive 650,000 barrels per day by the end of November.

Furthermore, it was noted that the Dangote Refinery’s positive impact on Nigeria will extend beyond providing a reliable supply of refined products. It is expected to contribute significantly to the country’s foreign exchange earnings. The rrefinery’s enerated revenues will be reinvested in further development; underscoring Aliko Dangote’s commitment to Nigeria.

In terms of procurement, the Nigerian oil will be acquired in US dollars, not naira, given the refinery’s location in a free trade zone on the outskirts of Lagos. However, NNPCL will supply some crude at reduced prices due to its equity stake in the refinery.

Edwin emphasized the refinery’s capability to process various African crude grades, as well as Middle Eastern Arab Light and US light-tight oil. Additionally, the excess gasoline, meeting Euro 5 quality standards, will be exported to African markets, the US, and South America. Jet fuel will be directed to Europe, while diesel will be primarily distributed in sub-Saharan Africa.

Overall, the Dangote Refinery is poised to be a pivotal player in Nigeria’s energy landscape; addressing fuel supply challenges and bolstering economic growth. The refinery’s impending operations are eagerly anticipated by oil marketers and stakeholders alike.

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