Dangote Petroleum Refinery has purchased at least 16 million barrels of Nigerian crude for delivery in October, according to industry sources, as Africa’s largest refinery continues to increase processing and strengthen its grip on domestic crude supplies.
The volume is equivalent to about 520,000 barrels per day and would cover most of the refinery’s feedstock requirements, based on its nameplate capacity of 700,000 barrels per day.
The purchases underline the refinery’s growing dependence on Nigerian crude as it ramps up operations and prepares for a planned initial public offering, with the reliability and cost of crude supply expected to be a major issue for potential investors.
NNPC to supply majority of October cargoes
Sources familiar with the supply arrangements said the Nigerian National Petroleum Company would provide Dangote with nine cargoes in October.
Eight of those cargoes are expected to contain Nigerian crude, while one will consist of U.S. WTI Midland crude.
The planned supply would match the highest monthly level of NNPC deliveries to the refinery, following similar volumes recorded in April, May and August, according to Kpler data.
Dangote has also reportedly secured additional crude outside the NNPC allocation. Traders said the refinery purchased another WTI Midland cargo from a separate supplier through a spot tender, alongside further Nigerian crude cargoes needed to bring its October purchases to at least 16 million barrels.
The final volume could still rise if the refinery secures additional supplies before the delivery schedule is completed.
Dangote did not immediately comment on the reported purchases.
Nigerian crude intake rises sharply
The refinery’s reliance on domestic crude has increased substantially compared with last year.
Kpler data showed that Dangote received about 565,000 barrels per day of Nigerian crude in August, almost twice its average intake of roughly 280,000 barrels per day during the previous year.
The planned October purchases suggest that the refinery intends to maintain a similarly high level of crude processing.
At approximately 520,000 barrels per day, the reported Nigerian volumes alone would account for a large share of the refinery’s total capacity, before taking into account imported crude from the United States and other suppliers.
IPO puts crude supply under investor scrutiny
The refinery’s ability to secure steady and competitively priced crude supplies has become increasingly important as it moves towards a potential public offering.
Investors are expected to closely examine whether the refinery can maintain reliable access to sufficient feedstock while controlling costs.
The issue has also gained greater significance because the conflict involving Iran has disrupted oil supplies and shipping routes from parts of the Middle East, increasing demand for alternative crude supplies.
With competing volumes from the region under pressure, Nigerian crude has become more valuable in international markets, potentially tightening the availability of barrels for export.
Dangote’s growing purchases could therefore reduce the amount of Nigerian crude available to overseas buyers at a time when global demand for alternative supplies is increasing.
Refinery continues to diversify crude sources
Despite its increased purchases of Nigerian crude, Dangote has continued to diversify its supply base.
The refinery has previously purchased several grades of crude from outside Nigeria, including barrels from Libya and Guyana.
Its acquisition of U.S. WTI Midland cargoes for October also reflects a strategy aimed at giving the refinery greater flexibility in sourcing feedstock.
The ability to process different grades of crude could help Dangote reduce dependence on a single source while allowing it to respond to changes in price, availability and refinery operating requirements.
For Nigeria, however, the refinery’s expanding appetite for domestic crude is becoming an increasingly important factor in the country’s oil market.
As Dangote raises processing levels, more Nigerian crude is likely to be absorbed locally rather than exported, potentially reshaping the balance between domestic refining and the country’s long-established reliance on crude oil exports.
