Vitol Group, Trafigura Group, and BP Plc have emerged as the primary buyers of fuels from Nigeria’s massive Dangote oil refinery, which could transform petroleum trade across Africa and Europe.
According to Bloomberg, citing data from Precise Intelligence, a Geneva-based oil and gas trading analytics firm, the trio has been responsible for most of the refinery’s shipments since production began to ramp up in mid-2024.
Precise explained that automotive gas oil (diesel) is the biggest cargo type being exported, followed by fuel oil. They represent 60% of what is being bought from the refinery. Other fuels include gasoline and jet fuel.
Once fully operational, Dangote’s refinery is expected to process around 650,000 barrels of crude oil daily into products such as gasoline and diesel. This capacity will surpass that of any single refinery in Europe or Africa, significantly impacting the oil and fuel trade in both regions.
Since its launch, the refinery has loaded nearly 6 million tons of fuel, according to data from Precise, which is equivalent to approximately 45 million barrels. In October, the average loading rate was about 35,000 tons per day. Dangote confirmed late last month that the refinery has achieved a processing rate of around 420,000 barrels of crude per day.
The three dominant buyers of Dangote oil
Vitol, Trafigura, and BP PLC are major players in European oil trade. Vitol, headquartered in Geneva, Switzerland, is one of the largest independent energy traders, with revenues exceeding $400 billion in 2023. Trafigura, based in Singapore, also plays a significant role in the global commodities market, with annual revenues around $240 billion.
BP, headquartered in London, UK, is one of the “supermajors” in the oil and gas sector, generating over $210 billion in revenue in 2023. These three companies have collectively accounted for the majority of Dangote’s refinery shipments since production began, with a focus on key products like diesel and fuel oil, reshaping oil trading dynamics in Africa and Europe.
Previous Financing Challenges: A $3 Billion Dilemma
Despite the promising start, Dangote has faced challenges in securing sufficient financing to maintain operations. In February 2024, BP, Trafigura, Vitol, and other traders met Dangote in Lagos and London, offering loans to provide the refinery with much-needed working capital. The refinery required about $3 billion to purchase large quantities of crude oil, and the traders proposed loan deals that would be repaid through fuel exports. However, Dangote was hesitant to sign these agreements due to concerns over losing control of the refinery and reducing his profit share.
Tensions with Local Oil Marketers
Dangote Refinery has sparked tensions within Nigeria’s domestic market. Local oil marketers, represented by the Petroleum Products Retail Outlet Association of Nigeria (PETROAN) and the Independent Petroleum Marketers Association of Nigeria (IPMAN), have raised concerns over fuel pricing. With rising crude costs and inflation affecting local fuel prices, marketers are already threatening to import Premium Motor Spirit (PMS) at cheaper rates from international markets, which could undermine the refinery’s competitive edge.
This dispute highlights the broader challenges Nigeria faces in balancing local oil market dynamics and controlling fuel prices amidst increasing demand. Dangote’s refinery is reshaping Nigeria’s oil industry by processing large volumes of crude into refined products. The refinery’s capacity and output position it as a major player in both the domestic and international oil markets.
However, significant challenges remain, including agreement on fuel pricing, resolving local market tensions and maintaining control over operations.
How Dangote navigates these obstacles will determine whether the refinery can fully capitalize on its potential to transform the African and European oil markets.
