Dangote Petroleum Refinery in Lekki, Lagos, has successfully purchased its first shipment of one million barrels of Algeria’s high-quality light sweet Saharan Blend crude oil, according .to a report by Argus.
The report by Punch newspaper on Monday stated that it marks a significant step for the refinery as it diversifies its crude oil supply sources and reaches its full daily refining capacity of 650,000 barrels.
It added that the shipment, expected to arrive between March 15 and 20, marks the first time the refinery will be refining Algerian crude, a high-quality light sweet crude known for its low sulphur content and premium refining yields.
Saharan Blend crude, with an API gravity of 45.3 and just 0.1 per cent sulphur content, is highly sought after and traditionally exported to Europe.
According to the report, the refinery bought the shipment from trading firm Glencore last week but didn’t state the price as both parties didn’t directly confirm the purchase.
“None of the tankers that have loaded in Algeria so far in February have flagged Africa as their destination, suggesting this cargo will load in March,” the report stated.
The report, quoting a trader, noted that Saharan Blend’s quality is suitable for the Dangote refinery and that it is competitively priced compared to Nigerian grades.
“Nearly 420,000 b/d of crude was delivered to Lekki for Dangote so far this year, with about 82 per cent of that made up of light sweet grades, Vortexa data show,” the report stated. It said Nigerian crude accounted for 87 per cent of all arrivals.
The March-loading trade cycle for Saharan Blend was slow to kick off due to sluggish demand in Europe because of seasonal refinery maintenance and ample light crude supply.
This may have encouraged buyers in Europe to hold off on purchases of Saharan Blend in anticipation of weaker price differentials, prompting sellers to look to alternative outlets.
Saharan Blend prices had dropped by $1/bl over this month when March-loading cargoes were trading and now stand at a 20¢/bl discount to the North.
Beyond Algeria, Dangote refinery has been exploring long-term crude supply agreements from international markets, including the United States and Brazil. Speaking last year, Aliko Dangote, the refinery’s founder, emphasised the need to look beyond local suppliers:
“We will start importing crude oil from African countries. When we get to those countries, we’ll start negotiating with them and bringing in supplies from there.”
However, he also said that if Nigeria’s crude oil was readily available, there would be no need to look elsewhere.
Africa’s largest refinery, built by Aliko Dangote in Lagos, began processing crude into products, including diesel, naphtha, and jet fuel in January last year.
GIK/APA