Nigeria’s biggest refinery, Dangote Petroleum Refinery, has reportedly ordered two million barrels of West Texas Intermediate (WTI) Midland from the United States-based oil trader, Trafigura Group, for delivery in February.
The latest signaled the increasing competitiveness of American crude in the global market.
A report by Bloomberg quoted traders’ familiar with the matter to have disclosed that Trafigura Group has sold two million barrels of WTI Midland to the Dangote Refinery for delivery by the end of February.
This has, however, generated comments from netizens who were surprised a company in Nigeria, a country rich in crude oil will have to import.
The exponential growth in US oil supply over the past decade has reshaped the global market, extending its influence to regions like Asia.
Nigeria, whose economy heavily relies on petroleum exports, is particularly impacted by these transatlantic deliveries.
Below are some reactions to the report:
Tolu Ogunlesi @toluogunlesi: “I’m not sure there was EVER any agreement that NNPCL would be the sole or exclusive supplier of crude oil to the Dangote Refinery. Considering the Refinery size, and the dangers of a global business depending on a single supplier.
(Even the Refinery has said that they’re designed to process crude from around the world). If you’re aware of any such agreement kindly share details. PS. NNPCL owns (on behalf of the Federation) ONLY 20% of the Refinery.”
Kelvin. @realkelvin07:
“I am glad that I have been proven right again.
Remember I spoke about the plan of the board of Dangote Refinery to import heavy crude as far back as 2022.
Please tell me: how can you pledge crude oil to OPEC offtakers when you cannot supply a commercial refiner in Nigeria, crude oil?
As we speak, of the 510k barrels of crude oil NNPC gets from JV & PSC, about 425k barrels is pledged in different FSA’s.
I ask again: How can you commit to delivering crude to OPEC offtakers when you’ve a commercial refiner in Nigeria that is unable to get the 300k barrels of crude oil you exchanged as equity ($1.7bn in feedstock) contribution for shares in the refinery?”
Sanusi Dantata @SasDantata:
“NNPC is supposed to give Dangote enough crude oil to operate.
NNPC has been unable to give him the required amount of crude oil to operate. It doesn’t have availability due to its existing loan/swap commitments and reduced oil production in Nigeria!
Is it his fault? No!
Should he wait until NNPC can give him enough crude several years down the road? No!
What should he do then?
==> Get crude from elesewhere. Simple!”
Olú?eun Onígbindé @seunonigbinde:
“I don’t know why Nigerians think they can give Dangote the crude they don’t have.
“The daily average of the Federation’s share of crude oil was 414,463 barrels
in 2020, 292,198 barrels in 2021, 290,649 barrels in 2022, and 205,184 barrels in 2023 (Figure 6).
These are far below the daily average of one million barrels per day that accrued to the Federation between 2004 and 2014
“Because you hear that Nigeria produces 1.3m barrels per day doesn’t mean everything belongs to Nigerian Federation. For most PSC deep offshore, companies take a larger percentage. Nigeria’s Federation component has shrunk in recent times to less than 400kbpd. Also, NNPC gets a priority allocation of 445kbpd for swaps related for domestic supply. So where’s the sustainable plenty crude for Dangote except the ones used for swaps are diverted to the complex?
It’s the same crude that NNPC is pledging for loans through different SPVs. Production has significantly declined, earnings are weak, currency is not in a good place. Brace up.
Also, this is the consequence of insecurity and crude oil theft that has made our abundant easy onshore production unattractive. We are getting more reliant on offshore production where Nigeria gets less share due to production cost. We need an urgent conversation on the way forward.
And if you don’t know, the US biggest export by NAICS-4 classification is not technology. It’s still the old oil and gas.
Shehu A Abubakar @ShehuAA: “I just can’t wrap my head around the fact that the Dangote refinery which is also partly owned by the FG has to buy crude from the US. When you have people thriving off crude oil theft holding govt positions, how do we address our low oil production caused by crude theft?”
