Nigeria’s prominent Dangote oil refinery is reportedly reselling cargoes of U.S. and Nigerian crude, according to four trade sources familiar with the matter, Reuters reports. This revelation comes amidst ongoing operational challenges at the refinery.
Three of the sources linked the reselling to technical problems affecting the refinery’s crude distillation unit (CDU). However, a Dangote executive dismissed these claims, asserting that the CDU is operational. The refinery’s spokesman also denied allegations that Dangote was offering to sell Nigerian crude.
The refinery, which commenced production in January, is poised to become the largest in Africa and Europe once it reaches full capacity. This development has the potential to disrupt the lucrative Europe-to-Africa fuel trade and position Nigeria as a significant fuel exporter.
Sources revealed that cargoes of Nigerian Escravos and Forcados crude, along with U.S. WTI Midland crude, were among the grades being offered. Traders noted that the refinery has been importing several crude cargoes monthly. While such resales by refineries are rare, they are not unheard of, traders added.
The news led to a decline in crude prices, with Brent crude dropping as much as 2.5% towards $80 a barrel before recovering to above $81 by 1700 GMT on Friday.
The Dangote refinery, built at a cost of $20 billion by Africa’s richest man Aliko Dangote, aims to reduce Nigeria’s reliance on imported fuel. Despite being Africa’s largest oil producer, Nigeria has continued to import fuel due to underperforming domestic refineries.
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