…Cites domestic supply shortage
?angote Petroleum Refinery and Petrochemicals says it has issued a tender for an additional 11 million barrels of US crude oil over the next six months, due to Nigerian crude oil producers inability to meet its feedstock requirements.
The 650,000 barrels per day (bpd) refinery has already received 9 million barrels of West Texas-Intermediate crude from the US since the beginning of 2024 to offset unreliable domestic supplies.
The new tender, closing on July 21, aims to procure two million barrels per month of WTI Midland crude for the worlds largest single-train facility located in Ibeju Lekki, Lagos, for the next six months starting in August.
In a tender reported by Bloomberg, ?angote Refinery purchased five million barrels of West Texas Intermediate (WTI) Midland crude for delivery in the upcoming months of August and September. Additionally, the company initiated a tender process to acquire an additional six million barrels of American crude for September.
This reliance on US crude highlights Nigerias challenges in meeting its own refining needs, attributed to issues such as crude theft, aging infrastructure, and underinvestment, which have led to a decline in production. In April, Nigerias daily output was only 1.45 million barrels, well below its capacity of 2.6 million bpd. The country recorded an estimated 30 million barrels underproduction in the first four months of 2024.
?angote Refinery, crucial to Nigerias goal of becoming a net exporter of petroleum products, has found it necessary to import crude to sustain operations amidst insufficient domestic supply.
President of ?angote Group, Aliko ?angote, during the ‘Africa CEO Forum 2024’, stated that the refinery will need to continue importing crude as production scales-up and alternative supply contracts are sought. It also makes economic sense for us to tender for crude. If we could source 100 percent Nigerian crude, then fine; but we cant wait, he said.
Commenting on the challenge with sourcing crude locally, ?angote added, there is a bit of a problem for us to source the entire volume of crude that were looking for domestically because we need different types and mixes. Unless crude production improves which we pray and hope for we need to go elsewhere.
The refinery took in more than 41 million barrels of feedstock in the first half of the year, as it completed test runs and gradually increased processing rates, tanker-tracking data show. Of that, about a quarter has been American supply.
According to the data, the refinery took delivery of 11 WTI cargoes, or 9 million barrels, between February and May, contrasting with around 18 million barrels of Nigerian crude deliveries.
Nigerian National Petroleum Company Ltd., (NNPCL), has struggled to meet its 300,000 bpd obligation to the refinery due to operational constraints.
International financial analytics corporation, S&P Global, recently described the ?angote Petroleum Refinery and Petrochemicals company as capable of resolving Nigerias foreign exchange (forex) issue and its huge pressure on the local Naira currency, while also catalysing the countrys economic development.
S&P Global, headquartered in Manhattan, New York City, disclosed this during an onsite visit to the refinery as part of its sovereign credit ratings assessment of Nigeria. The team from the international rating agency were accompanied by officials from the Federal Ministry of Finance. It noted that the refinery would bolster Nigerias oil sector and, more importantly, also have a positive impact on its growing economy.
Currently operating at 350,000 bpd capacity, Vice President of Oil and Gas at Dangote Industries Limited, (DIL), Devakumar Edwin, recently disclosed that the refinery would scale up to at least 500,000 bpd capacity by July/August, commencing the refining of petrol and ultra-low sulphur diesel.
He noted that while most refineries were built by foreign companies, it is a thing of pride that a Nigerian company designed and built the worlds largest single-train refinery complex while acting directly as its own Engineering, Procurement, and Construction, (EPC) contractor.
The refinery, which also incorporates a self-sufficient marine facility capable of handling the worlds largest vessels, can meet 100% of Nigerias requirement of all liquid products (Gasoline, Diesel, Kerosene & Aviation Jet) and have surplus of each of these products for export.
