The Dangote Refinery is set to receive approximately 24 million barrels of Nigerian crude in October and November, signalling a shift towards utilising more domestic supply.
This amounts to about 400,000 barrels of crude per day over the next two months, according to a cargo allocation list seen by Bloomberg.
This is in line with the federal government’s significant shift in its oil sales strategy, which began on October 1 with the commencement of naira-denominated crude oil sales to Dangote Refinery.
This move aims to eliminate the longstanding dollar dependency, enhancing local economic stability and transparency in the oil sector.
Also, it is gathered that the Nigerian National Petroleum Company Limited (NNPCL) may have ended its role as the sole off-taker for petrol from Dangote Refinery, allowing other marketers to negotiate prices directly.
Sources knowledgeable about the matter told Premium Times that NNPC will no longer act as the sole off-taker, a move designed to promote competition and improve supply chain stability.
Previously, NNPCL purchased petrol at N898.78 per litre and sold it to marketers at a subsidised rate of N765.99, absorbing a subsidy of about N133 per litre. Experts warn that this change may lead to increased fuel prices as the subsidy system is dismantled.
The deal allows Dangote to receive 40,000 barrels per day (bpd), a critical step towards reducing foreign exchange pressures and saving approximately $7.32 billion annually on petrol imports.
This initiative is expected to stabilise fuel prices and bolster domestic refining capabilities, marking a pivotal change in Nigeria’s energy landscape.
Dangote oil refinery is poised to process up to 400,000 barrels of crude per day (bpd) over the next two months and will reach full capacity in the coming months.
A London-based analyst at FGE, Ronan Hodgson, told Bloomberg that the increased demand from Dangote could significantly tighten the West African crude market in the fourth quarter.
Hodgson noted that this could push Nigeria’s crude exports below one million barrels daily due to the refinery’s substantial intake.
However, Bloomberg also reported that some of these shipments may face delays, with October’s schedule including two cargoes initially postponed from September. Despite this, the volume slated for the coming months is notably higher than the refinery’s average intake of 255,000 barrels per day in the first half of the year, as Dangote gradually scaled up its operations.
The 650,000bpd refinery is currently operating at a 60- 70-person capacity and is expected to reach full capacity within months, according to Vartika Shukla, chairman of Engineers India Limited, the project management firm overseeing the facility.
The latest allocations also suggest a reduction in Dangote’s purchases of US crude, traders said.
Earlier in the year, the refinery imported millions of barrels of West Texas Intermediate (WTI) Midland crude but later re-sold some and halted plans for further acquisitions.
Meanwhile, recall that in a deal reached last month, NNPCL agreed to supply crude to the refinery in exchange for exclusive rights to distribute the gasoline it produces.
Experts noted that if Dangote continues to increase its processing rates, Nigeria may be closer to achieving its long-anticipated goal of reducing expensive imports of refined oil products.
“As the refinery boosts production, the need for gasoline and diesel imports in West Africa will diminish rapidly,” Hodgson said
However, marketers can now negotiate prices directly with Dangote Refinery based on market conditions rather than relying on NNPCL as the intermediary.
An NNPC official confirmed this development on Monday, saying, “Yes, it is true. We can no longer continue to bear that burden.”
Recall that when the Dangote Refinery started processing petrol in September, the NNPCL was the only entity allowed to buy and resell it to marketers, who then distributed it to others.
The NNPCL announced that it would buy petrol from Dangote Refinery at N898.78 per litre and sell to marketers at N765.99 per litre, shouldering a subsidy of almost N133 per litre.
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