According to the Executive Director of Dangote Group, Devakumar Edwin, the Dangote Petroleum Refinery is actively importing crude oil and anticipates receiving its first crude shipment in two weeks.
Although the Nigerian National Petroleum Company Limited trades crude oil on behalf of Nigeria, Edwin said in an interview with S&P Global Commodity Insights on Monday that the NNPCL had committed its petroleum to other organisations.
The head of the Dangote refinery declined to identify the other organisations that were receiving crude from the oil corporation, but NNPC revealed last month that it had signed a $3 billion crude oil-for-loan agreement with the African Export-Import Bank. In accordance with the agreement, the corporation could guarantee the bank that it would receive future oil output as loan repayments.
Additionally, NNPC sources informed The PUNCH on Tuesday that the firm had signed crude oil contracts with a number of parties, a fact that made it hard for the organisation to initially satisfy Dangote’s demand.
However, a top executive of the oil business claimed that preparations were already being made to guarantee that Dangote’s refineries’ crude oil requirements would be satisfied in November.
Edwin further emphasised that Dangote Refinery’s importation of crude was only a temporary measure because the company would begin receiving supply from NNPCL in November.
Edwin went on to say that the company will start producing up to 370,000 barrels per day of oil that would result in Aviation Gas Oil, also known as diesel, and jet fuel in October 2023.
The factory would manufacture Premium Motor Spirit, also known as fuel, by November 30, 2023, according to the Dangote Group’s boss.
This occurred at the same time when oil marketers said that importing crude oil would not cause the price of diesel and jet fuel to drop.
While everything was going on, Edwin said in the interview that the Dangote Refinery would start a gradual rise in petrol output, hoping to achieve an impressive 650,000 barrels per day by November 30.
He stressed that the refinery was ready to accept crude oil, saying, “Right now, I’m ready to receive crude. Only the first ship is still at sea. Consequently, we may begin as soon as it arrives.
The NNPCL had already committed its crude oil to another business on a forward basis, causing a short delay, Edwin clarified during his interaction with S&P with regard to the change in the initial timeframe.
The refinery would soon run solely on crude oil from Nigeria starting in November 2023, he claimed, and the disruption was only temporary.
Additionally, it was learned on Tuesday in Abuja that although the NNPCL had agreements with other parties for the delivery of crude oil, it would still make sure to provide the product to the Dangote refinery in November.
The African Export-Import Bank provided an emergency $3 billion loan to the national oil company, which was announced by the company in the middle of August.
It had made the loan announcement in a succinct press release headed, “Relief for the naira: NNPC Ltd secures $3bn emergency crude repayment loan from AFREXIM Bank.”
“The NNPC Ltd and @afreximbank have jointly signed a commitment letter and term-sheet for an emergency $3 billion crude oil repayment loan,” the statement’s full text said.
The signing, which happened today at the bank’s head office in Cairo, Egypt, “will provide some immediate disbursement that will enable the NNPC Ltd to support the Federal Government in its ongoing fiscal and monetary policy reforms aimed at stabilising the exchange rate market.”
O’tega Ogra, the Senior Special Assistant to the President on Digital/New Media, provided additional information about the loan at the time. In several posts on X (formerly Twitter), O’tega Ogra explained that the $3 billion was an upfront cash loan secured by proceeds from a small portion of future crude oil production, rather than a crude-for-refined products swap loan.
This proved that the national oil company had kept its end of the bargain when it promised to use Nigerian crude in other projects.
Is this loan hazardous for NNPCL or the Nigerian Treasury? No. In comparison to their rights, NNPCL’s exposure is incredibly little. Furthermore, this loan has no associated sovereign guarantees.
“How will this loan be paid back? A portion of the money from future crude oil production will be used to pay back the loan. It’s a calculated action that maintains equilibrium between our immediate economic need and our potential output capacity.
“How does this swap transaction differ from those in the past? This is not a swap where crude is exchanged for refined goods and no money changes hands.
Although the refinery is situated in a free trade zone on the outskirts of Lagos, Edwin stated in the most recent S&P interview that the Nigerian oil would be acquired in US dollars rather than naira.
However, due to its equity position in the refinery, he said that the NNPCL would deliver some oil at deeply discounted rates.
Furthermore, Edwin said that in addition to processing heavy Angolan grades, the Dangote refinery could also process Middle Eastern Arab Light and even US light-tight oil.
