Dangote Refinery Reshapes Nigeria’s Crude Oil Trade Landscape in 2024

The Dangote Petroleum Refinery has transformed Nigeria’s crude oil trade dynamics by retaining 13% of the country’s crude oil exports for domestic supply in 2024, as reported by Reuters. This shift has increased the domestic share of Nigeria’s oil exports, slightly reducing exports to Europe and signaling a strategic focus on internal consumption.

Domestic Refining on the Rise

The refinery’s operations highlight Nigeria’s growing capability to process crude oil locally, reducing reliance on imports. However, despite being a top crude exporter, Nigeria imported 47,000 barrels per day (bpd) of U.S. oil in 2024, an unusual occurrence explained by two main factors:

1. Crude-for-loan obligations: The Nigerian National Petroleum Company Limited (NNPCL) has tied a portion of Nigeria’s crude production to financial commitments, servicing loans that extend until 2029.
2. Domestic crude supply challenges: The NNPCL reportedly failed to supply adequate crude to the Dangote Refinery, leading the facility to import U.S. West Texas Intermediate (WTI) crude, with its first shipment arriving in November 2024.

Global Oil Trade Disruptions

The impact of the 650,000-bpd Dangote Refinery extends beyond Nigeria, contributing to shifts in global crude flows. Factors influencing these shifts include:

• Sanctions on Russian oil, which have redirected trade routes.
• Geopolitical conflicts, such as the Russia-Ukraine war and tensions in the Middle East, which disrupted supply chains.
• Emerging pipelines and refineries in developing regions, reshaping traditional trade dynamics.

Global crude export volumes fell by 2% in 2024, marking the first decline since the COVID-19 pandemic. Key factors included weak demand growth, regional conflicts, and shipping disruptions.

Regional and Global Trade Adjustments

• Europe: Reduced imports from Russia, while increasing purchases from the U.S. (+60,000 bpd) and Guyana (+162,000 bpd).
• India and China: Boosted purchases of discounted Russian crude.
• Middle East: Shipping costs rose due to attacks on vessels in the Red Sea, prompting refiners to source crude from Guyana and the U.S.

Other Influential Developments

• Iraq: Exported 82,000 bpd less in 2024.
• United Arab Emirates: Exports dropped by 35,000 bpd.
• Canada: Expanded the Trans Mountain pipeline, enhancing crude flows.
• Mexico: Experienced declining oil output.
• Libya: Halted oil exports due to internal challenges.

Impact of the Dangote Refinery

The Dangote Refinery has emerged as a game-changer for Nigeria’s oil sector, advancing the country’s self-sufficiency while influencing global trade patterns. By utilizing more domestic crude, it reduces Nigeria’s dependence on foreign refined products, contributing to economic growth and energy security amidst a turbulent global oil market.