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Dangote refinery boosts Nigeria’s domestic oil supply, despite rising imports from US

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Dangote Refinery’s 2024 performance increased Nigeria’s domestic oil supply while imports of US oil rose, highlighting shifting global oil trade dynamics.

 

 

In 2024, the Dangote Petroleum Refinery significantly contributed to Nigeria’s domestic oil market, retaining 13% of the country’s crude oil exports for local use.

This increase in domestic supply helped raise Nigeria’s share of its own oil exports compared to previous years, slightly reducing the nation’s exports to Europe.

 

Also read: Petrol prices soar in Nigeria amid refinery challenges

 

However, despite being a major crude oil exporter, Nigeria experienced a curious trend of rising imports from the United States.

A recent Reuters report revealed that in 2024, Nigeria imported 47,000 barrels per day of US oil—a notable anomaly for a country that produces vast amounts of crude.

Experts point out that this is highly unusual for oil-exporting nations, especially considering Nigeria’s large crude production.

The report also highlighted that the Nigerian National Petroleum Company Limited (NNPCL) may continue servicing its crude-for-loan agreements until 2029, amidst rising domestic demand for oil and the increasing capacity of local refineries.

The Dangote Refinery, with its 650,000 barrels per day (bpd) capacity, played a significant role in Nigeria’s importation of US oil, a shift that aligns with the changing global oil market.

According to the report, the Dangote refinery received multiple shipments of US West Texas Intermediate (WTI) crude in 2024, after it failed to receive adequate crude supply from the NNPCL. This led to a substantial increase in Nigeria’s oil imports from the US.

In November 2024 The first shipment of US WTI to the Dangote refinery, marking a pivotal moment in Nigeria’s oil trade dynamics.

The refinery’s growing reliance on US oil is seen as part of a broader trend where new refineries, particularly in the Global South, are reshaping global crude oil trade routes.

The global oil market also experienced significant changes in 2024. The volume of crude exports declined by 2%, the first dip since the COVID-19 pandemic, due to weak demand growth, sanctions on Russian oil, and shifts in trade routes caused by global conflicts.

The war in Ukraine, for instance, led European refiners to reduce their imports from Russia while boosting purchases from the US and the Middle East.

Other disruptions included attacks on vessels in the Red Sea due to the Israel-Gaza conflict, which raised shipping costs from the Middle East. As a result, refiners turned to alternative suppliers like the US and Guyana.

Notably, Iraq’s exports dropped by 82,000 bpd, while the UAE saw a reduction of 35,000 bpd, while Europe increased imports from Guyana and the US.

Despite sanctions, India and China continued to import Russian oil, further reshuffling trade routes in global oil markets.

In addition, Canada’s Trans Mountain pipeline expansion, falling oil output in Mexico, and halted Libyan exports have all contributed to these shifting dynamics in the oil trade.

As Nigeria navigates these complexities, the role of the Dangote Refinery in reshaping both domestic and global oil supply chains remains significant, underscoring the growing interdependence of international oil markets.


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