Nigeria’s Dangote refinery, the largest in Africa, is reportedly looking to the United States for a significant portion of its crude oil needs, according to a recent report.

A Bloomberg report said the $20 billion refinery, established by Africa’s richest man Aliko Dangote, has issued a term tender to buy two million barrels per month.

The tender for overseas oil — from a refinery that’s situated in Africa’s largest producer nation, highlights how significant the plant will be in global crude and fuel trading. It will be the largest refinery facility in Africa when fully up and running.

According to the report, the tender closes at 3 p.m. on May 21. The tender shows how Nigerian crudes are struggling to compete against American supply, one trader of West African barrels said.

The refinery, currently under construction in the Lekki Free Zone near Lagos, Nigeria, is a 650,000 barrels per day (BPD) integrated project. It is poised to become Africa’s largest oil refinery and the world’s largest single-train facility.

In March, the Nigerian government expressed concern over the potential shortfall in local crude oil supply for Port Harcourt, Kaduna, Warri, Dangote, and BUA refineries after their full readiness.

Heineken Lokpobiri, minister of state for petroleum resources (Oil), cautioned that refineries, including modular ones, might face insufficient local crude oil supply without a sector-wide production increase.

Also, the Nigeria Upstream Petroleum Regulatory Commission (NUPRC) has mandated all oil companies in Nigeria to prioritise supplying crude to domestic refineries facing difficulties in procuring it locally.

Only after fulfilling these domestic supply obligations are producers permitted to export crude.

In cases where agreements on crude supply between local refiners and producers are not reached, the NUPRC will serve as an intermediary, facilitating sales purchase agreements through a willing-buyer, willing-seller model.

This new policy stands to benefit the Dangote refinery by allowing it to source crude oil from local suppliers rather than relying solely on imports.

However, the specific volume of crude each refinery will be required to purchase remains uncertain. (BusinessDay)

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