Overview
Nigeria’s Dangote Refinery, the continent’s biggest processing plant, has boosted its intake of American crude oil to account for roughly one third of its total feedstock this year. The project sits near Lagos and can handle 650 000 barrels per day. It began operations in 2024 and immediately faced a shortfall in local supply that forced it to look overseas for a stable flow of crude.
Background on Local Output
Nigeria ranks as Africa’s top oil producer but struggles to send enough crude to its own refineries. Local grades often carry high sulphur content and yield less gasoline when processed. Refinery officials have said they must take in what local suppliers can deliver and then fill the gap with imports. This need prompted Dangote to pursue contracts with traders in the United States, where West Texas Intermediate Midland crude offers higher gasoline output and easier blending.
Contracts and Volumes
In June, traders recorded a booking of 300 000 barrels per day for delivery to Dangote, which marked a record intake since startup. For July, the refinery awarded contracts to bring in at least five million barrels of WTI crude. Vitol secured two million barrels, Socar of Azerbaijan agreed to another two million, and Glencore covered one million. Ship-tracking databases show these volumes almost double the import level recorded during the first months of operation.
Drivers of the Shift
Refinery leaders point to technical benefits. Midland crude yields more high-octane petrol and blends more readily with products in local markets. The head of operations, Edwin Devakumar, explained that the plant can process whatever grades local producers offer but needs to import the rest to run at full capacity. He added that reliable quality and predictable delivery schedules from US suppliers help the refinery maintain output targets.
Impact on Local Industry
This surge in American imports highlights a challenge for Nigeria’s own upstream producers. Operators must ramp up output of grades that meet the refinery’s technical needs or face continued reliance on foreign barrels. The government has tried to boost investment in pipeline networks and storage facilities to streamline deliveries but progress remains slow. Analysts warn that unless local fields improve quality or reduce sulphur levels, Dangote will keep turning to the US market.
Market Reaction
International traders have taken note of the refinery’s buying spree. Some expect Dangote to expand its American imports beyond the current levels if local supply gaps persist. Commodity experts say that rising purchases could put upward pressure on Midland crude prices in the Atlantic basin. In contrast, regional crude markers may slip slightly as import demand shifts away from West African grades to meet urgent domestic needs.
Broader Implications
Beyond Nigeria, the refinery’s strategy signals a trend for large processing projects in emerging markets that face supply chain hurdles. Operators may increasingly look to distant suppliers if domestic producers cannot meet quality or volume requirements. For Dangote, securing a stable feedstock stream will prove vital to reaching its full 650 000 barrel per day capacity and turning a profit.
Outlook
Going forward, Dangote plans more negotiations with US and other international traders as it seeks to lock in multi-month deals at competitive prices. Local producers face pressure to upgrade field output or offer incentives that match global benchmarks. The refinery’s success in stabilising crude flows could influence policy on energy security in Nigeria and guide future investments in the sector. As the plant evolves into a key regional hub, its sourcing choices will remain under close watch.
