In Bid for Full Capacity, Dangote Refinery Buys 1m Barrels of Oil from Algeria

Nigeria’s 650,000 barrels per day Dangote refinery has bought its first cargo of Algeria’s light sweet Saharan Blend crude, according to market sources quoted by Argus Media, a leading independent provider of global energy market intelligence.

Dangote bought the 1 million barrels cargo from trading firm Glencore in the past week, sources told Argus, adding that it is due to be delivered over 15-20 March. The deal was not directly confirmed by either party and the price is unknown, it added.

The mega refinery, Africa’s largest, had said in February that it could begin operating at full capacity this month.

The facility built by Nigerian billionaire, Aliko Dangote, in Lagos began processing crude into products, including diesel, naphtha and jet fuel, in January last year and started processing petrol in September.
It aims to compete with European refiners when operating at full capacity but has been struggling to secure sufficient crude locally. Costing about $20 billion to build, the refinery has helped to partly meet local demand and has reduced reliance on imports.

Last month, Head of the Dangote oil refinery, Devakumar Edwin, said the refinery was operating at 85 per cent capacity and “we can go 100 percent in 30 days.”

The refinery has asked for 550,000 bpd of crude for January-June this year from oil producers in Nigeria, which the refinery says the producers are hardly able to meet.

But Argus said that none of the tankers that had loaded in Algeria in February had flagged Africa as their destination, suggesting that the Dangote cargo will load this March.

One trader noted that Saharan Blend’s quality is suitable for the Dangote refinery and that it is competitively priced compared to Nigerian grades.

Nearly 420,000 bpd of crude was delivered to Lekki for Dangote so far this year, with about 82 per cent of that made up of light sweet grades, Vortexa data show. Nigerian crude accounted for 87 per cent of all arrivals, it added.

The March-loading trade cycle for Saharan Blend was slow to kick off due to sluggish demand in Europe because of seasonal refinery maintenance and ample light crude supply, the report said.

This may have encouraged buyers in Europe to hold off on purchases of Saharan Blend in anticipation of weaker price differentials, prompting sellers to look to alternative outlets, it added.

Saharan Blend prices have dropped by $1 per barrel over the course of this month, when March-loading cargoes were trading, and now stand at a 20¢/bl discount to the North Sea Dated benchmark on a fob Algeria basis. (Thisday)