Dangote to import over 140m barrels from U.S., others 

Price of Premium Motor Spirit (PMS) may remain high in Nigeria as importation of crude oil and surge in price of vessel due to renewed sanctions against Russia worsened the situation.

This comes as the Dangote Refinery may import about 140 million barrels of crude oil from the United States and other places amid struggling oil production in Nigeria and the implementation of Domestic Crude Supply Obligations (DCSO).

Despite the local refining of petroleum products in Nigeria, pump prices of PMS hover around N970 and N1,200 per litre across the country with the recent increase from the Dangote Refinery, which prompted a sector-wide increase.

While Dangote had reported taking delivery of about two million barrels of WTI Midland crude from Chevron Corporation in December, there are indications that the refinery would receive another 12 million barrels from the U.S. next month.

If the company maintains such a volume of import in 2025, it will be importing as much as 144 million barrels of crude oil in the year to serve for about 221 days at a full capacity of 650,000.

Last year, Dangote did not import crude for about three months relying on a deal with the Nigerian National Petroleum Company Limited (NNPCL) for a supply of 400,000 barrels a day of Nigerian crude to be paid for in naira .

The $20 billion refinery had earlier increased its storage capacity by one billion litres, as it disclosed a plan to ramp up production capacity to nameplate to produce 57 million litres of PMS, 27 million litres of diesel and 20 million litres of Jet A1. Nigeria’s average daily consumption of PMS stands at about 50 million litres.

Head of Dangote Refinery, Edwin Devakumar, had last month said the refinery was operating at 550,000 bpd, which was 85 per cent capacity in crude distillation.

While Dangote imports crude and some marketers import products, the renewed sanctions on Russia pushed the cost of hiring a tanker or vessel up by 15 and 10 per cent for crude and products respectively.

Reuters reported that tanker freight costs for “clean products” like PMS, diesel and jet fuel, had risen by about 10 per cent according to data from SSY Tankers and trade sources.

Shipping crude from the U.S. Gulf to China was going for about $8.715 million per voyage earlier this month, up by $1.895 million. The reality, which may be faced by Nigerian importers, mean that the cost would be passed on to consumers to keep the pump price of petroleum products in the upward direction, unless there is local sufficiency of crude and petroleum products.

While Dangote refinery had lowered its prices before the festive season, the company increased prices mid-January based on volume. Marketers, who were buying from the refinery at quantities ranging from two million to 4.99 million litres, had to pay N955 per litre as against N899.50.

But for those going for five million litres and above, the price increased from N895 to N950 per litre. Most marketers, including the NNPC, adjusted their prices afterwards.