Dangote refinery seeks oil supply from Libya

Nigeria's Dangote refinery is negotiating with Libya to secure crude oil for its 650,000 barrels per day (bpd) plant, according to a senior executive. The refinery is also exploring oil sources from Angola as it struggles with domestic supply issues.

Constructed at a cost of $20 billion by Africa's wealthiest individual, Aliko Dangote, the refinery is located on the outskirts of Lagos. It is the largest refinery in Africa and aims to eliminate Nigeria's reliance on imported fuels due to the country's inadequate refining capacity.

Since commencing operations in January, the Dangote refinery has faced challenges in obtaining sufficient crude supplies within Nigeria. Despite being Africa's largest oil producer, Nigeria is plagued by theft, pipeline vandalism, and low investment, impacting its crude availability. Consequently, Dangote has been importing crude oil from distant sources such as Brazil and the United States.

"We are in discussions with Libya to import crude," said Devakumar Edwin, a senior executive at the Dangote refinery, in an interview with Reuters. "We also plan to approach Angola and other African countries."

While Edwin did not provide specifics about the negotiations, he mentioned that international traders and oil companies are significant buyers of Dangote's gasoil, with much of it being exported. "The main buyers are major traders like Trafigura and Vitol, as well as BP and, to some extent, TotalEnergies. However, most of them are exporting the gasoil," Edwin added.

Data from traders and shipping sources indicate that Dangote is increasing gasoil exports to West Africa, thereby capturing market share from European refiners. Edwin noted that Dangote's oil trading division is active, with teams based in London and Lagos, to manage supply chains and product sales. Reuters initially reported on the planned trading division in March.

Nigeria's upstream regulatory authority has had disagreements with Dangote, claiming that the sulphur content in its gasoil exceeded the permissible limit of 200 parts per million (ppm). Aliko Dangote refuted this, stating that while the sulphur content was initially high, it had decreased to 88 ppm and is expected to drop to 10 ppm by early August as production increases.