According to Reuters, Africa’s biggest oil refinery is pursuing crude from Libya. Explore the reasons behind this decision.
Due to inadequate domestic supplies, Nigeria’s Dangote plant worth $20 billion has been forced to boost its imports.
According to Devakumar Edwin, a high-ranking official at Nigeria’s Dangote Refinery, the company is currently in talks with Libya to ensure that it can obtain sufficient crude oil for its daily output of 650,000 barrels. Reuters reported on Sunday about this development.
The decision to relocate arises due to insufficient local resources for the facility valued at $20 billion, owing to challenges including pipeline vandalism, theft and poor investment in Africa’s top oil-producing nation.
The aim of building the refinery outside Lagos was to enhance Nigeria’s oil refining capacity and terminate its dependence on imported fuels, as per Aliko Dangote – Africa’s wealthiest man, who established it. Regrettably, since commencing operations this year; its owner confirmed that the plant has had to import crude from countries like Brazil and USA.
On Saturday, while touring the facility, Aliko Dangote declared that since its launch in January, the refinery had only obtained five crude cargoes from state oil company NNPC instead of fifteen as anticipated.
The refinery intends to achieve a minimum of 60% of its maximum capacity by September and reach a daily production rate of 550,000 barrels before the end of this year. Currently, their output consists mainly of diesel and aviation fuel.
In a statement to Reuters, Edwin – the vice president of Dangote Industries Group’s oil and gas division confirmed that they are currently in talks with Libya regarding importing crude. The company also plans to hold discussions with Angola along with several other African nations on this matter.
According to reports, he refused to disclose information regarding the discussions with African nations neighboring Nigeria but asserted that Dangote’s gasoil was bought by major international traders and oil companies. A significant portion of this product is exported.
According to Edwin, Trafigura and Vitol – the two major traders, along with BP and even TotalEnergies to a certain extent, are the primary off-takers. However, all of them have stated that they intend to transport it offshore.
The company is currently facing a dispute with the Nigerian Midstream and Downstream Petroleum Regulatory Authority regarding their claim that Dangote’s gasoil surpasses the 200 ppm sulfur content limit. Additionally, there are allegations against its owner for striving to establish a monopoly in West Africa by urging authorities to halt diesel and aviation fuel imports.
The allegations have been refuted by Dangote who described them as “extremely saddening.”
