Nigeria's Dangote refinery reselling US WTI crude following assurances on domestic supply

Nigeria's new Dangote refinery is reselling barrels of WTI crude oil imported from the US that were initially intended for processing, following efforts by the national regulator to increase domestic supply of feedstock, according to a company source.

Speaking to S&P Global Commodity Insights July 26, the Dangote source confirmed that the refiner is selling off US barrels, linking the move to activity by the Nigerian Upstream Petroleum Regulatory Commission to make domestic supply available.

"Since the NUPRC has assured more crude, we can obviously sell the US crude and lift more Nigerian crude," said the source.

In an official statement released July 26, the company denied speculation that outages at the plant had triggered the crude selling activity. "Our CDU is working and in perfect condition," company spokesman Tony Chiejina said in the statement.

Chiejina added that no Nigerian crude was being reoffered to the market, noting that the plant is "not authorized to sell any crude we buy from Nigeria."

Securing feedstock has been a major issue for the 650,000 b/d refinery as it ramps up operations, with the company complaining of difficulty sourcing crude oil from international oil companies (IOCs) back in June.

Dangote was intended to secure energy independence for Nigeria, putting pressure on the refinery to process Nigerian crude oil, but it has been awarding long-term contracts for WTI crude oil and seeking supply from an array of producers including Brazil, Angola, Senegal and Libya.

To address the issue, the NUPRC has developed a domestic crude supply obligation (DCSO) with major oil producers operating in the country under which they have to offer Nigerian crude to local refineries at "market price" before exporting supply, the NUPRC said July 11.

Since starting operations this year, 66 cargoes of crude oil have been dispatched to the Dangote refinery, of which 48 have originated in Nigeria and 18 from the US, according to S&P Global Commodities at Sea data.

State oil company NNPC has supplied the refinery with around 17 million barrels of crude oil, representing around 30% of the total volume delivered to the plant by ship, CAS data shows.

NNPC was originally expected to supply Dangote with at least 300,000 b/d crude oil, in line with its 20% stake in the project, but doubts over the scale of its involvement have arisen after it slashed its ownership to 7.2% this month.