Nigeria’s Dangote refinery expects to process 100% local crude by year end

Nigeria’s Dangote refinery in Lagos expects Africa’s biggest refinery to rely totally on Nigerian crude by the end of the year, a move that would replace hundreds of thousands of barrels a day of imported oil.

The plant owned by Aliko Dangote, the continent’s richest person, received about half of its crude in June from local producers who will be able to sell more to the facility as their foreign supply obligations end, according to Devakumar Edwin, vice president at Dangote Industries, who oversees the 650,000 barrel-a-day plant outside Lagos.

“We expect some of the long-term contracts will expire,” he said in an interview last week at the sprawling site. “Personally, and as a company, we expect that before the end of the year we can transition 100% to local crude.”

Read also: Dangote Refinery hits record US crude import on local shortfall

Dangote sold the idea of the massive plant as a way for Nigeria, the top oil producer on the continent, to stop sending barrels to Europe only to be refined and shipped back as costly imports — a process rife with corruption.

The gradual ramp up of the refinery has already made Nigeria a net exporter of petroleum products, with room to go before reaching capacity. Still, the effort required large quantities of overseas crude after domestic traders failed to meet demand.

OPEC-member Nigeria has seen a withdrawal of oil majors from onshore and shallow water fields that have been taken over by local companies with fewer resources.

Meanwhile, supply contracts with foreign companies, crude theft and attacks on pipelines in the Niger Delta have curbed production reducing the availability of oil at home.

Since the Dangote facility opened, the company has bought crude from Brazil, Angola, Ghana and Equatorial Guinea, according to Edwin. Improved relations between the refinery, local oil traders and the government will result in a steady supply of Nigerian crude, he said.

That still requires a significant increase of local oil over the coming months. In June, the refinery sourced 53% of its crude supply from domestic producers and 47% from the US, according to data compiled by Bloomberg. The plant is currently processing 550,000 barrels of crude a day, according to Edwin.

Dangote was scheduled to take five cargoes from Nigeria’s state oil company in July, the same amount that it’s due to take up in August, according to a list of cargo allocations seen by Bloomberg News. Each shipment holds almost a million barrels of crude.

Dangote’s assets are valued at $27.7 billion, according to the Bloomberg Billionaire’s Index, making him Africa’s richest person.