Dangote Oil Refinery is cutting crude imports from the United States and sourcing more from Nigeria for processing, Journalists reported.
The 650,000-capacity refinery would import just over four-fifths of its feedstock from domestic sources in the third quarter, according to the report, up from less than three-quarters in the previous quarter, according to tanker-tracking data and information from traders.
Crude prices came under pressure last month after news that the facility was planning to resell some of the U.S. barrels it had previously bought, highlighting Dangote’s already pivotal role in the Atlantic Basin oil market.
The refinery’s efforts to scale back its overseas crude purchases could leave even more U.S. export barrels competing for buyers in other countries. The upturn could gain further momentum in the coming months.
Journalists previously reported that the federal government will sell crude oil to Dangote in local currency from October 1.
It is not yet clear how much supply will be traded under the scheme, but the process could eliminate Dangote’s need for foreign crude once the 450,000 barrels allocated for domestic consumption is exhausted.
The $20 billion Dangote refinery in Lekki, Lagos, has completed trial runs and gradually ramped up its throughput, receiving more than 56 million barrels of crude oil since December, of which 78% came from local sources. A company spokesman told Journalists earlier this month that the company had taken delivery of six cargoes of crude oil directly from the Nigerian National Petroleum Company Limited earlier this month.
Most of the cargoes from Nigeria are about 1 million barrels each. Two more shipments from Nigeria and 2 million barrels of WTI Midland are scheduled for September, according to tanker tracking data.
The facility will absorb an average of nearly 10 million barrels per month for the six months through September.
A big increase in inflows of U.S.-produced raw materials was expected in early summer. But some of the U.S. barrels it bought this month and earlier months have been resold, a claim that was debunked by the refinery in late July.
The company also canceled two bids to buy another 6 million barrels of U.S. crude in September, traders said.
The changes could also result in fewer Nigerian barrels available for sale in Europe and Asia. Dangote gasoline is expected to hit the market by September.
