Dangote Refinery Boosts Nigeria’s Domestic Oil Supply, Alters Global Trade Routes

The Dangote Petroleum Refinery has contributed to a significant shift in Nigeria’s crude oil exports, retaining 13 percent of the country’s crude oil exports as domestic supply in 2024, according to a report by Reuters. This marks an increase from previous years and slightly reduced Nigeria’s crude exports to Europe. However, Nigeria, despite being a major net exporter of crude oil, has been importing 47,000 barrels per day of US oil, a situation considered unusual for crude-exporting nations.

The country’s oil imports from the US were notably boosted by shipments to the Dangote refinery, which received its first shipment of US West Texas Intermediate (WTI) crude oil in November 2024. This is attributed to the Nigerian National Petroleum Company Limited (NNPCL) failing to supply crude to the refinery, increasing Nigeria’s total oil imports from the US.

Experts believe that this development is part of a larger trend where new refineries in the global south, including the Dangote refinery, are influencing global crude flows, especially amid sanctions on Russian oil. The Dangote refinery, with a capacity of 650,000 barrels per day, has contributed to the increased demand for US crude oil in Nigeria.

Meanwhile, the NNPCL’s debt burden from several crude-for-loan agreements continues to impact Nigeria’s oil supply, with these obligations potentially lasting until 2029. These agreements have tied volumes of Nigeria’s oil production to various financial commitments, making it difficult for the NNPCL to meet the domestic demand for oil.

In the broader global context, the volume of crude oil exports in 2024 saw a two percent decline, the first such drop since the COVID-19 pandemic. This decline is attributed to weak demand growth, geopolitical conflicts, sanctions, and the emergence of new pipelines and refineries. The conflict between Russia and Ukraine, along with tensions in the Middle East, has reshuffled global oil trade routes, forcing countries to seek new suppliers and contributing to higher shipping costs.

Countries in Europe and South America, for example, reduced imports from Russia and turned to new sources, including the US and Guyana, while countries like China and India continued to embrace Russian oil. This reshuffling of trade routes and changes in global oil flows have created a more complex landscape for international crude oil markets.