KEY POINTS
- Dangote Refinery has imported its first-ever crude oil cargoes from the United Arab Emirates to diversify its supply sources.
- The move comes as domestic crude shortages continue to affect the refinery despite an agreement with NNPC for local crude supplies.
- The refinery plans to double its processing capacity to 1.4 million barrels per day by 2028, increasing its demand for crude from multiple regions.
The Dangote Petroleum Refinery has imported two cargoes of crude oil from the United Arab Emirates (UAE), marking the first time the facility has sourced crude from the Middle East.
The development represents a significant shift in the refinery’s procurement strategy as it seeks to diversify its crude oil supply amid persistent challenges in securing sufficient domestic crude.
According to a report by S&P Global Commodity Insights, the two shipments are the refinery’s first purchases from a Middle Eastern supplier since operations began. Previously, the refinery relied mainly on crude sourced from Nigeria, other African countries and the United States.
The report attributed the refinery’s latest purchases to the resumption of oil exports from the Middle East following an interim peace agreement between the United States and Iran.
The agreement restored confidence in shipping activities through the strategically important Strait of Hormuz, allowing crude exports from the region to flow more smoothly.
This improvement in supply logistics has provided refiners, including Dangote, with greater access to Middle Eastern crude grades.
Domestic Crude Supply Challenges Persist
Although the 700,000-barrel-per-day refinery was designed primarily to process Nigeria’s light sweet crude, the company has increasingly broadened its crude oil sources as production continues to ramp up.
An existing agreement between the Dangote Refinery and the Nigerian National Petroleum Company (NNPC) Limited guarantees the supply of between 13 and 15 cargoes of Nigerian crude every month, with payments made in naira to reduce the refinery’s exposure to foreign exchange fluctuations.
However, S&P Global noted that the arrangement has faced repeated setbacks due to limited crude availability and operational challenges at export terminals.
Earlier this year, Dangote Refinery Chief Executive Officer David Bird disclosed that these supply constraints had forced the refinery to seek additional crude supplies from outside Nigeria to sustain operations.
The refinery’s long-term expansion strategy is also expected to increase its demand for crude oil significantly.
Dangote plans to double the refinery’s processing capacity from 700,000 barrels per day to 1.4 million barrels per day by the end of 2028.
At full capacity, the refinery would be capable of processing approximately 80 per cent of Nigeria’s current daily crude oil production, making it one of the largest refining facilities in the world.
