Dangote Increases US Crude Oil Purchases to 16 Million Barrels: Here’s Why He’s Importing

Dangote to Begin Oil Production to Support Refinery Operations

Dangote Refinery has purchased an additional 5 million barrels of WTI Midland, which is expected to be delivered by next month and in September, according to Bloomberg.

The 650,000-barrel-per-day mega-refinery on the outskirts of Lagos, Nigeria’s economic hub, has also started a tender to purchase a further 6 million barrels slated for September.

As the refinery ramps up production and is expected to release petrol into the Nigerian market this month, it has bought more than 16 million barrels of US crude this year to help the facility function.

Why Is Dangote Importing US Crude?

In late May, Neusroom reported that Dangote tendered to buy a total of 24 million barrels of crude from the US, which will be delivered to the refinery 2 million barrels each month across 12 months.

While the total purchase from the US represents about 33 percent of the crude oil supply the refinery has received this year, the new 5 million barrels purchase last week shows a growing dependency on imported crude to keep the mega facility running.

The Mega-oil facility located in Lagos is word’s largest single train refinery

Experts believe that low production in Nigeria remains a major issue that forces Dangote to seek imports as an alternative.

Oil theft, insecurity in the Niger Delta, and corruption have been cited as the major reasons Nigeria, once Africa’s largest oil producer, cannot meet its OPEC+ daily quota.

According to data from the CBN, domestic production of crude dropped from 1.43 million barrels per day in January to 1.25 million barrels per day in May.

“Dangote is buying from the US because they can supply enough. Nigeria’s production is low and cannot meet his demands, and also has enough to export.”
Engr. David Okechukwu, a drilling engineer in Port Harcourt.

The lack of enough crude for local refineries, including Dangote, has forced some to seek alternatives. Although NNPC earlier this month declared a state of emergency on production within the country’s oil and gas sector, the state-owned oil company is seeking a crude oil-backed loan worth $2 billion, according to some reports.