Alhaji Aliko Dangote, the President and Chief Executive of Dangote Group, has reiterated that the $20 billion Dangote Petroleum Refinery was specifically built to process Nigerian crude oil and enhance its value within the country.
In a statement released on Thursday, Dangote emphasized that this focus remains unwavering, even as the refinery has also been processing crude oil from other regions, including Europe and the United States.
Addressing concerns regarding the refinery’s operations, Dangote acknowledged that while the facility has been refining a variety of crude grades, its primary mission is to utilize Nigerian crude.
“The refinery was built to use Nigerian crude and add value to it within Nigeria. Why should we deviate from that focus?” Dangote stated, adding that the crude supply issues were “getting resolved”, but that the refinery remained open to all opportunities “to supplement it”.
“Dangote refinery is designed to process a range of light and medium grades of crude oil, including Nigerian grades,” said Rasool Barouni, Associate Director and head of Refining at S&P Global Commodity Insights. “Other similar grades including other WAF grades could be an option.”
Despite the refinery’s commitment to processing Nigerian crude, domestic supply issues have posed challenges. The refinery has been forced to import crude, such as the US WTI Midland grade, to supplement Nigerian supplies.
The refinery’s activity has already impacted global crude flows, with significant effects on European markets, which are major consumers of light, sweet Nigerian crude.
The refinery has signed long-term contracts for WTI Midland crude due to its competitive pricing, with the US grade accounting for 30 percent of the crude delivered to the facility. However, Dangote remains hopeful that domestic supply issues will be resolved soon.
Dangote’s statement comes amidst ongoing discussions about the refinery’s crude supply. The company clarified that it has never accused the Nigerian National Petroleum Corporation (NNPC) of failing to supply crude, but expressed concerns about the Nigerian Upstream Petroleum Regulatory Commission’s (NUPRC) enforcement of domestic crude supply obligations.
The refinery highlighted that it often has to purchase Nigerian crude from international traders at a premium due to supply shortfalls from domestic sources.
The refinery called on the NUPRC to fully enforce the domestic crude supply obligation as mandated by the Petroleum Industry Act (PIA) to ensure that the facility can secure its full crude requirements from domestic production.
The impact of the Dangote Refinery on the global oil market has been significant, with experts noting that its operations could disrupt Europe’s oil industry, particularly in the Northwest Europe gasoil market. OPEC has also acknowledged the refinery’s potential to influence global diesel and jet fuel supplies.
