According to Bloomberg, Nigeria’s notable Dangote oil refinery is allegedly reselling cargoes of U.S. and Nigerian crude, as reported by four trade sources familiar with the situation.
This comes amid persistent operational issues at the refinery. Three of these sources attributed the reselling to technical difficulties with the refinery’s crude distillation unit (CDU).
However, a Dangote executive refuted these claims, stating that the CDU is fully functional. Additionally, the refinery’s spokesman denied any accusations that Dangote was selling Nigerian crude.
The Dangote refinery, which began production in January, is set to become the largest in Africa and Europe once it reaches full capacity. This advancement could disrupt the profitable Europe-to-Africa fuel trade and establish Nigeria as a key fuel exporter.
Sources disclosed that Nigerian Escravos and Forcados crude, as well as U.S. WTI Midland crude, were among the grades being offered. Traders mentioned that the refinery has been importing multiple crude cargoes monthly. While resales by refineries are unusual, they are not unprecedented, traders noted.
This news resulted in a decline in crude prices, with Brent crude falling by up to 2.5% towards $80 a barrel before rebounding to above $81 by 1700 GMT on Friday.
Constructed at a cost of $20 billion by Africa’s wealthiest man, Aliko Dangote, the refinery aims to lessen Nigeria’s dependence on imported fuel. Despite being Africa’s leading oil producer, Nigeria has continued to import fuel due to its underperforming domestic refineries.