Dangote to import over 140 million barrels from US, other countries.
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The price of premium motor fuel (PMS) may be high in Nigeria as crude oil imports and increased shipping costs due to new sanctions against Russia have exacerbated the situation.
This comes as Dangote Refinery may import about 140 million barrels of crude oil from the US and other countries amid tight oil production in Nigeria and the implementation of the Domestic Crude Supply Obligation (DCSO).
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Despite the local refining of petroleum products in Nigeria, PMS pump prices hover around N970 and N1,200 per litre across the country with the recent increase in the Dangote refinery, which has triggered a boom in the sector across the country.
While Dangote had said it had received about two million barrels of WTI Midland crude oil from Chevron Corporation in December, it is understood that the refinery will receive an additional 12 million barrels from the United States next month.
If the company maintains such import volumes in 2025, it will import up to 144 million barrels of crude oil annually to supply about 221 days at a full capacity of 650,000. Last year, Dangote did not import crude oil for about three months, relying on an agreement with the Nigerian National Petroleum Company Limited (NNPCL) for a supply of 400,000 barrels per day of Nigerian oil to be paid for in Naira.
The $20 billion refinery had earlier increased its storage capacity by one billion liters while unveiling a plan to increase production capacity to produce 57 million liters of PMS, 27 million liters of diesel and 20 million liters of Jet A1. The average daily consumption of PMS in Nigeria is about 50 million liters.
Dangote's refinery manager, Edwin Devakumar, had said last month that the refinery was operating at 550,000 bpd, which represents 85% of its crude distillation capacity.
While Dangote imports crude oil and some traders import products, renewed sanctions against Russia have increased the cost of chartering a tanker or ship by 15 and 10 percent for crude and products respectively. Reuters reported that tanker freight costs for "clean products" such as PMS, diesel and kerosene have risen by about 10%, according to data from SSY Tankers and trade sources.
Crude oil from the Gulf of Mexico to China cost about $8.715 million per trip at the start of the month, an increase of $1.895 million. The reality, which Nigerian importers may face, is that the cost will be passed on to consumers to keep the pump price of petroleum products high unless there is a local sufficiency of crude oil and petroleum products.
While Dangote's refinery had reduced its prices ahead of the festive season, the company increased its prices in mid-January based on volume. Traders, who bought from the refinery in quantities ranging from two to 4.99 million litres, were charged N955 per litre compared to N899.50. But for those who bought five million litres and above, the price increased from N895 to N950 per litre. Most traders, including NNPC, subsequently adjusted their prices.
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