THE over $20 billion Dangote Petrochemical Refinery has resumed importing crude oil from the United States after a three-month pause, as the facility increases its production levels while targeting market expansion.
The ICIR reports that the refinery purchased around two million barrels of WTI Midland crude from Chevron Corporation.
The shipment is expected to arrive at the 650,000 bdp (barrels per day) petrochemical plant in Lagos next month to cushion the effect of possible long queues in the Yuletide.
Earlier in the year, the refinery regularly imported one or two shipments of US crude monthly in addition to using domestic supplies.
Conversely, these imports were reduced around August following an agreement with the Federal Government that the Nigerian National Petroleum Corporation (NNPC) Limited would supply crude oil to the refinery in naira rather than dollars.
The deal is that Dangote will receive up to 400,000 barrels of local oil daily, paid for in Nigerian currency.
The reasons for the return to US imports remain unclear, though a report from Sparta Commodities earlier this week suggested lower shipping costs might have made US oil more affordable in Europe recently.
However, some economic watchers posited that the Nigerian government wouldn’t meet the local crude oil supply to the over $20 billion refinery to enable it to meet its 650,000 barrels per day local refining capacity.
“You recall, there was a crude swap between the Afrexim Bank and the NNPCL. This may have affected the crude supply to Dangote by the NNPCL.
“Moreover, as he seeks market expansion in other West African countries, there’s possibility that he’ll import fuel to upscale whatever he’s getting from the NNPCL,” an economist and oil governance expert, Dumebi Newretta Oluwole, said.
She stressed that the shortfall in supply was forcing imports from Dangote as he sought expansion of his business to other continental regions.
The ICIR reported earlier that there was hope for price moderation as the Independent Petroleum Marketers Association of Nigeria (IPMAN) reached a landmark agreement with Dangote Refinery, directing its members to exclusively source petrol from the refinery to help bring down fuel prices.
This latest development halted IPMAN’s previous plans to import fuel independently and is expected to stabilise the fuel supply and lower costs for Nigerians.
Previously, both IPMAN and the Petroleum Retail Outlets Owners Association of Nigeria (PETROAN) had suggested that competition, including importing fuel, would reduce prices.
However, with the new partnership, IPMAN intended to work directly with Dangote Refinery, streamlining the fuel supply chain and potentially driving down costs by reducing dependence on imports.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.