Dangote Refinery Seeks $20 Billion to Buy Crude Oil from Outside Nigeria

Dangote Refinery is in talks with international lenders, including development banks, to boost purchase of crude oil from outside Nigeria in order to produce at full capacity the Financial Times reports. The African Finance Corporation is said to be one of the lenders involved in the talks to raise capital for purchasing crude oil for the Dangote Refinery; the refinery is also exploring arrangements to secure crude oil from international oil traders on credit.

Dangote Refinery, the largest single train refinery in the world, has an installed capacity of 650,000 barrels per day. It started producing petroleum in early September, 2024 but it has had difficulties securing feedstock from diminished Nigerian production of crude oil. The refinery has imported crude oil from Brazil and the United States of America and is also seeking supplies from new sources such as Libya and Angola.

According to the Founder of the Dangote Group,  billionaire industrialist, Aliko Dangote, Dangote Refinery  will start producing refined petroleum products at its 650,000 barrels per day capacity by the second quarter of 2025. He says the refinery is currently producing 420,000 b/d.

Controversy Over NNPC Crude Oil Supply to Dangote Refinery and Pricing 

Dangote Refinery seems to have planed on securing crude oil supply from Nigeria’s state-owned Nigerian National Petroleum Company Limited (NNPCL).  The corporation acquired a 20 per cent stake in Dangote Refinery for which it was to pay for about 65% of this stake with crude oil supplies to the refinery. The NNPLC later reduced its stake to 7.2 % , covered by the initial $1 billion cash payment.

Dangote Refinery officials have suggested that they have not been able to secure crude oil from Nigeria because of a cabal that is out to frustrate their attempt to wean Nigeria off dependence on oil imports, pointing at various times to the international oil companies, domestic oil marketers and even the NNPLC and government regulators in the oil and gas sector as the source of their problems.

There was also a protracted open conflict with the Nigerian National Petroleum Company Limited and Dangote Refinery over the pricing of petroleum from the refinery and if the NNPLC would be the sole off taker.  This dispute was ended with the eventual eradication of the fuel subsidy which made it viable for independent marketers to buy refined petroleum from Dangote Refinery and sell at marker prices.

 

 

 

 

 

 

 

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