*Refinery to disrupt refined product flows in Atlantic Basin, says S&P
*Research firm says Nigeria risks petrol shortages as import dips
*Dangote threatens to halt investment in steel sector
*Offers to sell refinery to NNPC after being labelled monopolist
Emmanuel Addeh in Abuja
Dangote refinery is in talks with Libya to secure crude for the 650,000 barrels per day plant and will also seek Angolan oil, a Senior Executive, Devakumar Edwin, said at the weekend, as it seeks to overcome problems with domestic supplies.
The $20 billion refinery, built by Africa's richest man, Aliko Dangote, on the outskirts of Lagos, is Africa's largest, and is designed to end Nigeria's dependence on imported fuels because of insufficient refining capacity.
Since Dangote began operations in January, it has been unable to get adequate crude supplies in Nigeria, which, although Africa's biggest oil producer, is struggling with theft, pipeline vandalism and low investment.
Dangote has resorted to importing crude from as far as Brazil and the United States, and is now looking to other African countries to source for products, Reuters reported.
"We are talking to Libya about importing crude," Dangote refinery, Edwin, told Reuters at the weekend. "We will talk to Angola as well and some other countries in Africa," he added.
He declined to give details about the talks, but said international traders and oil companies were among the biggest buyers of Dangote's gasoil, much of which was being exported.
"The biggest offtakers are the two big traders Trafigura and Vitol and BP and, to some extent, even TotalEnergies. But all of them are saying they are taking it to offshore," Edwin said.
Traders and shipping data have shown that Dangote is increasing gasoil or diesel exports to West Africa, taking market share from European refiners.
Edwin said Dangote's oil trading arm was operational, with staff in London and Lagos, to help manage supplies and sell products.
Nigeria's upstream regulator has recently clashed with Dangote, saying the sulphur content in its gasoil is above the required limits of 200 parts per million (ppm).
Dangote has denied that, and said the sulphur level was higher when production started, but had fallen to less than 88 ppm and would sink to 10 ppm in early August as output rises.
S&P Global also said the Dangote refinery was poised to disrupt refined product flows in the Atlantic Basin just months after its long-awaited commissioning in early 2024.
During this weekend's episode of the Oil Markets podcast, hosted by Joel Hanley, Charlie Mitchell, Matthew Tracey-Cook, and Tommy Petrou, S&P stated that as the mega-refinery intensified its search for crude sources beyond Nigeria's borders, significant changes were expected in the global market.
It said, "In January 2024, the oil world watched with weary relief as the much-delayed Dangote Refinery in Nigeria finally started production. Ramping up since then, this 650,000-barrel-a-day plant represents not only a huge technological and economic boost for West Africa, but it has the ability to upend trade flows in both crude and refined products.
"Many years ago, there was, perhaps, the expectation that this refinery would largely take Nigerian crude and provide the country with much of its transport fuel needs. However, this has not so far been the case.
"Now, the refinery is still getting up to speed, and so its regular intake and outputs have yet to be seen. But with political undercurrents and disrupted trade flows and new deals being made around the world, the phrase, 'complex refinery,' can rarely be better used."
Describing the refinery as a massive turning point for Nigeria and West Africa, S&P stated that its ship tracking showed that the Nigerian National Petroleum Company Limited (NNPCL) shipped around 30 cargoes to Dangote or 33,000,000 barrels of crude, including initial feedstock testing.
It said, "We're looking at 160,000 barrels a day. So we can see NNPC not being able to deliver on the agreement that it would supply around 300,000 barrels a day, and that has left the refinery forced to import crudes from other places, including from the United States."
As a large importer of refined product from Europe and other parts of the world, S&P stated that in terms of physical flows from Europe, petrol had really fallen off into West Africa already.
According to S&P, "So the schedule for July, many traders have said that only about 800,000 to 850,000 metric tons (petrol) are scheduled to be imported into Nigeria over this month, which is actually a very, very small volume.
"And this has been corroborated by our ship tracking data, commodities at sea. It's showing that over the month of June, there was actually a total volume imported into Nigeria that was at a three-year low.
"So it sounds like someone's clearly believing the hype that if it's going to be able to produce enough gasoline (petrol), then gasoline imports into the country need to fall. So it better happen, otherwise Nigeria is going to find itself very short of gasoline in quite quick order."
It also highlighted that there had been a significant slowdown in exports considering that the Dangote refinery exported 277,000 metric tons in June, 323,000 in May and 465,000 in April.
Meanwhile, Dangote is calling off plans to invest in a new steel plant in Nigeria after the government accused him of seeking to become a monopoly with his new refinery in the West African country.
"Our own board has decided that we should not have the steel plant. If we do, we will be called all sorts of names," Dangote said at a media briefing at the weekend.
The billionaire had announced earlier this year that once his mega-refinery was fully operational, his next investment venture was to start construction of a 5,000-ton steel plant that will supply the product to the West African market.
"Let other Nigerians also go and do it, because we are not the only Nigerians here, there are even some Nigerians with even more cash," Dangote said. "They should bring in that money from Dubai and from other parts of the world to come and invest in our own Fatherland," he added.
The Nigerian government last week claimed Dangote had requested the suspension of imports of diesel and aviation fuel in a move that would hand his refinery a monopoly on their sale in Africa's most populous country.
The accusations of monopoly were really "very disheartening," Dangote said. "Whatever Dangote was given, other people too were given. In fact, some of them, they even got more than us," the billionaire businessman stated.
The $20 billion Dangote Refinery, which became operational in January, currently produces aviation fuel, naphtha and diesel. The billionaire said he paid $100 million to buy the land in the free trade zone where his refinery is currently located in Lagos, Bloomberg reported.
The construction of the refinery is almost done, said the Vice President of the Dangote Industries Ltd, Olakunle Alake. "One or two units are being finalised and by August we should have just one item to complete," Alake added.
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Similarly, Africa's wealthiest man, Dangote, said he was willing to give up ownership of his multibillion-dollar oil refinery to the state-owned energy company, NNPCL.
"Let them (NNPC) buy me out and run the refinery the best way they can. They have labelled me a monopolist. That's an incorrect and unfair allegation, but it's ok. If they buy me out, at least, their so-called monopolist would be out of the way," Dangote told Premium Times in an exclusive yesterday.
He added, "We have been facing fuel crisis since the 70s. This refinery can help in resolving the problem but it does appear some people are uncomfortable that I am in the picture. So I am ready to let go, let the NNPC buy me out, run the refinery."
Starving the refinery of the feedstock required to keep it running at present capacity means it has turned to countries like Brazil and the US to bridge the gulf in supply.
Dangote said, "As you probably know, I am 67 years old, in less than three years, I will be 70. I need very little to live the rest of my life. I can't take the refinery or any other property or asset to my grave. Everything I do is in the interest of my country."
Dangote said the obstacles his refinery was facing seemed to have vindicated friends and associates who counselled him to tread with caution as he pumped billions of dollars into the Nigerian economy.
He stated, "Four years ago, one of my very wealthy friends began to invest his money abroad. I disagreed with him and urged him to rethink his action in the interest of his country.
"He blamed his action on policy inconsistencies and shenanigans of interest groups. That friend has been taunting me in the past few days, saying he warned me and that he has been proven right."
