The Dangote Refinery, Africa’s largest single-train refinery with a capacity of 650,000 barrels per day, is moving away from sourcing crude oil from the United States. Instead, it plans to significantly increase its reliance on Nigerian suppliers, according to a Bloomberg report.
Beginning in the third quarter of 2024, the refinery aims to source more than 80% of its crude oil locally, up from under 75% in the previous quarter. This shift follows recent federal government initiatives designed to ease foreign exchange pressures and streamline transactions by allowing crude oil sales to the refinery in Naira.
The Nigerian government has endorsed this new approach, which is set to take effect on October 1, 2024. This policy change aligns with President Tinubu’s proposal to stop crude oil sales to local refineries in foreign currency, a move intended to stabilize fuel prices and improve the dollar-naira exchange rate.
Dangote Refinery CEO Aliko Dangote has previously expressed frustration over challenges in securing local crude oil. The refinery has depended on imports from the United States and Brazil due to insufficient supply from the Nigerian National Petroleum Corporation (NNPC) and other international oil companies (IOCs). At one point, up to a third of its feedstock was sourced from the U.S.
Recent updates indicate that the refinery will receive six shipments of crude oil from NNPC next month, each with approximately one million barrels. Additionally, two more shipments from Nigerian suppliers and two million barrels of WTI Midland crude are expected in September.
Dangote has criticized Nigeria’s oil regulatory bodies for not enforcing the Petroleum Industry Act (PIA), which mandates oil companies to provide crude to local refineries. In response, the federal government has implemented measures to facilitate transactions in Naira.
In related news, the Federal Government has issued a warning to companies with oil block licenses that have not invested in exploration. State Minister of Oil Heineken Lokpobiri announced that licenses will be revoked if holders fail to meet investment requirements.
Lokpobiri criticized companies holding licenses without using them for exploration, describing these licenses as “souvenirs” rather than valuable assets. He stressed that effective exploration is crucial for the success of the upstream sector, which impacts the midstream and downstream sectors.
Out of 60 licenses awarded in the latest bidding round, only 10 companies have successfully attracted investment and started exploration. The government aims to boost the exploitation of Nigeria’s estimated 37.5 billion barrels of crude oil and 209.26 trillion cubic feet of natural gas reserves.
The forthcoming 2024 oil block licensing round is expected to attract more investment and prevent capital flow to competing African countries like Angola and Namibia. Nigeria’s oil production has fallen from around 2 million barrels per day a decade ago to just over 1.4 million barrels per day, partly due to oil majors shifting focus from onshore fields to more stable deepwater areas.
FCCPC Warns Traders on Price Gouging; Bishops Urge Government Action
The Federal Competition and Consumer Protection Commission (FCCPC) has issued a one-month ultimatum to traders and market stakeholders to address exploitative pricing practices or face regulatory enforcement. This announcement was made by the FCCPC’s Executive Vice-Chairman, Tunji Bello, during...
