Key Takeway:
- Dangote refinery has secured at least 16 million barrels of Nigerian crude for October delivery.
- The purchases amount to about 520,000 barrels per day, covering most of the refinery’s crude needs.
- Higher local crude intake could reduce Nigerian oil available for export as global supply tightens.
Nigeria’s Dangote refinery has bought at least 16 million barrels of Nigerian crude for October arrival as Africa’s largest refinery ramps up processing.
Four industry sources said the refinery’s October purchases are in line with recent months and significantly higher than last year’s average, as the Lagos-based plant increases its crude intake.
The 16 million barrels include monthly allocations from the Nigerian National Petroleum Company and additional volumes bought through a tender.
The purchases are equivalent to about 520,000 barrels per day and account for most of the 700,000 barrels per day that the refinery can process.
The higher crude intake comes as Dangote prepares for an initial public offering, with feedstock supply “in focus for investors.” The refinery’s growing purchases could also reduce Nigerian crude available for export at a time when global oil supply is under pressure.
NNPC to supply eight October cargoes
NNPC will supply Dangote with eight Nigerian crude cargoes scheduled for October, as well as one cargo of U.S. WTI Midland, according to a source familiar with the matter.
That would match the monthly record for NNPC supplies to the refinery after the state-owned oil company provided a similar volume in April, May and August, according to Kpler data.
The refinery also bought a second WTI Midland cargo through a spot tender from another supplier, two traders said.
Additional Nigerian cargoes will make up the refinery’s total October crude purchases of at least 16 million barrels.
The final volume could rise if Dangote secures more crude for the month.
Dangote did not respond to a request for comment on the purchases.
The refinery has increasingly sourced Nigerian crude as it ramps up processing, while continuing to buy different grades from international markets to meet its feedstock requirements.
Dangote’s Nigerian crude intake nearly doubles
Dangote refinery received 565,000 barrels per day of Nigerian crude in August, according to Kpler data. That was nearly double its average intake of 280,000 barrels per day last year.
The increase shows the refinery’s growing demand for domestic crude as it moves towards higher utilisation of its 700,000-barrel-per-day capacity.
Dangote has also bought crude from outside Nigeria, including supplies from Libya and Guyana, highlighting its reliance on both domestic and international markets for feedstock.
The refinery’s purchases are coming at a time when global crude markets are facing tighter supply because of the war involving Iran, which has sharply reduced competing supplies from the Middle East.
For Nigeria, higher domestic refining could mean more crude is processed locally rather than exported. But it also means Dangote’s growing requirements could absorb a larger share of available Nigerian crude.
The refinery’s crude supply arrangements are therefore becoming increasingly important as it prepares for its IPO and seeks to increase processing volumes.
