The Dangote Petroleum Refinery has secured its first shipment of one million barrels of Algeria’s Saharan Blend crude, to mitigate local crude oil supply challenges. This development is a show of the refinery’s efforts to ensure uninterrupted operations by diversifying its crude sources.
The Dangote Refinery, Africa’s largest with a capacity of 650,000 barrels per day (bpd), produces diesel, naphtha, jet fuel, and petrol.
Despite its significant capacity, the refinery has faced challenges in securing adequate local crude supplies. Initial agreements with the Nigerian National Petroleum Company Limited (NNPCL) for a supply of 300,000 bpd were hindered due to NNPCL’s prior commitments and lower-than-expected production levels.
To address these challenges, the refinery turned to international markets. The recent procurement of Algeria’s Saharan Blend, known for its low sulfur content and premium refining yields, marks the first instance of the refinery processing Algerian crude. This shipment is expected between March 15 and 20.
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The decision to import crude is also influenced by global market dynamics. For instance, India’s crude oil imports from Russia declined by 14.9% in February, leading Indian refiners to seek supplies from countries like Nigeria, Angola, and Mexico. This shift has increased competition for Nigerian crude, further constraining local supply availability.
In response to these domestic supply challenges, Nigeria’s upstream oil regulator announced measures to enforce compliance with domestic refinery supply quotas. Oil producers failing to meet these quotas risk having their export permits revoked, aiming to ensure that refineries like Dangote receive the necessary crude volumes. Despite these regulatory efforts, producers have cited non-competitive prices offered by local refiners as a hindrance to fulfilling their domestic obligations.
This development also underscores the interconnected nature of global oil markets, where geopolitical shifts and regional supply changes can have cascading effects on local industries.
