Renowned news agency, Reuters, has alleged that Dangote Refinery is reselling crude oil allocated to it locally as well as cargoes purchased in the international market. The agency said, the refinery was constrained to resell the crude oil due to technical problems in the crude refining section of the facility.
“Nigeria’s major Dangote oil refinery is reselling cargoes of U.S. and Nigerian crude, four trade sources familiar with the matter said on Friday” the news agency reports.
A Dangote executive allegedly asked about the offers and talk in the market hinting that the refinery is experiencing operational issues in the crude distillation unit.
Recall that the refinery started production in January and will be the largest in Africa and Europe when it reaches full capacity. It could upend what has been a highly lucrative Europe-to-Africa fuel trade and transform Nigeria into an exporter of fuels.
Cargoes of Nigerian Escravos and Forcados crude were allegedly among the grades being offered, as well as U.S. WTI Midland crude, the sources said. The plant has been importing several crude cargoes a month, traders have said.
Such resales by refineries are quite rare but not unknown, traders said. Crude prices added to an earlier decline after the news on Friday. Brent crude fell as much as 2.5% towards $80 a barrel, and had recovered to above $81 by 1700 GMT.
The 650,000 barrel-per-day refinery was built at a cost of $20 billion by Africa’s richest man Aliko Dangote.
Dangote aims to reverse Nigeria’s reliance on imports for fuel which have continued even though Nigeria is Africa’s biggest oil producer.