Report: US crude accounts for 30% of 47 cargoes delivered to Dangote refinery

S&P Global says the Dangote refinery is expected to “shake up” international crude flows when it reaches full capacity, noting that the firm has imported 18 cargoes of US crude so far.

In a report on August 1, S&P Global said the refinery has already made an impact since coming on stream in January.

According to the report, the 600,000 barrels per day (bpd) refinery, constructed by Aliko Dangote, Africa’s richest man, was conceived to make Nigeria self-sufficient in fuel.

Citing company sources and ship tracking data, the publication said in its first six months, the plant has scaled to 400,000 bpd and delivered diesel, jet fuel, naphtha, and fuel oil to both domestic and export markets.

“Petrol, Nigeria’s primary fuel type, should be produced from mid-August,” the report reads.

“Nevertheless, the refinery has already affected crude flows, with dozens of Nigerian cargoes remaining in-country and US WTI Midland, a comparable light, sweet grade, being imported.”

According to the publication, the mega-refinery could consequently tighten the light, sweet crude market.

“Its diet is WTI and the lighter Nigerian [crudes] so if you were chasing those barrels you’d probably feel it quite keenly,” a West African crude trader told Commodity Insights.

“Once they get to 600,000 b/d without any WTI Midland, ‘severely disrupted’ [will be] the headline.”

DANGOTE REFINERY AND THE NIGERIAN CRUDE

The Dangote refinery was constructed to run on Nigerian crude, S&P Global said, with the ability to process other light and medium crudes as a backup.

“To date, Dangote has received 47 cargoes — roughly 170,000 bpd — of Nigerian crude, 20 of them from Nigerian National Petroleum Company (NNPC) Limited,” the report reads.

“WTI Midland crude initially emerged as the favored feedstock to supplement Nigerian supply, with the refinery signing long-term supply contracts for the US grade and noting its competitive pricing.

“Platyts, part of Commodity Insights, last assessed WTI Midland into Rotterdam at $82.36/b on July 31, while Nigeria’s Bonny Light was assessed at $82.80/b on the same day.”

According to the publication, the US grade has accounted for 30 percent of crude delivered to Dangote, through 18 cargoes.

“While traders hinted that the US grade could rival domestic supply on pricing in the long term, its status as a staple of the Dangote diet now looks increasingly uncertain,” the report reads.

“Difficulties in accessing foreign exchange have left PetroChina vessels loaded with WTI Midland sitting off the refinery for weeks, with the Chinese firm reportedly reluctant to swap crude for products.”

S&P Global said aside from these issues, crude flows in and out of the Dangote refinery have been felt in other markets — especially in Europe, the largest consumer of light, sweet Nigerian crude.

S&P Global Commodities at Sea (CAS) data shows European imports of Nigerian crude have decreased since January — with only imports of US oil falling more.

According to the data, Brazil, Egypt, Libya, and Guyana have increased supply.

“Nigeria — which previously did not import crude — has seen the largest increase in WTI Midland imports globally since the refinery’s inauguration growing call on WTI Midland could affect Asia and Europe, the main export markets for the US crude which has emerged as a “swing” grade in recent years,” the report reads.

“For two consecutive years, Europe has ramped up WTI Midland imports by 20% to plug gaps left by sanctioned Russian oil.

“On a macro basis, Nigerian exports have fallen in successive quarters since last year.”

CAS data, according to the report, shows Nigeria exported 1.4 million bpd in Q1 2024 and 1.24 million bpd in Q2 2024 — down from 1.5 million bpd in Q4 2023.

On July 26, the Dangote refinery denied reselling shipments of crude oil from the United States (US) and Nigeria.