Dangote Refinery Accelerates Operations with US Oil Supply: A Game-Changer for Nigerian Fuel Market

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The 650,000 barrels per day Dangote Petroleum Refinery is leveraging cost-effective oil imports from the United States, constituting up to a third of its feedstock, to kickstart its production.

According to a Bloomberg report, the refinery has begun shipping products while preparing units to facilitate gasoline production, promising a significant shift in Nigeria’s fuel landscape. Alan Gelder, Vice President of Refining, Chemicals, and Oil Markets at Wood Mackenzie, anticipates Dangote’s influence on Atlantic Basin gasoline markets.

Running at approximately 300,000 barrels per day, nearly half of its capacity, the refinery is diversifying its product range by shipping jet fuel, gasoil, and naphtha. Wood Mackenzie forecasts the activation of gasoline-focused units by summer, while other analysts project the full operation of the residue fluid catalytic cracking unit by year-end.

Despite operating at minimum rates, the refinery’s impact on product markets is notable, as indicated by Ronan Hodgson, an energy analyst at FGE. Additionally, Dangote’s recent announcement of reducing diesel prices further reflects its commitment to influencing the economy positively.

Bloomberg’s report suggests that US-grade WTI Midland comprises a significant portion of the refinery’s imported oil, potentially continuing as long as it remains economically advantageous. However, Nigeria’s recent regulatory changes aim to redirect crude sales to domestic refineries, potentially altering Dangote’s sourcing dynamics.

The decision by the Federal Government to facilitate crude sales to local refiners, coupled with the option to transact in the local currency, reflects efforts to enhance domestic refining capacity and reduce reliance on imported products.

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