Aliko Dangote, the founder of the Dangote Group and Africa’s richest man, is setting up an oil trading division for his oil refinery which is based in Lagos.
Reuters is reporting that the oil trading arm will likely be based in London, and be responsible for sourcing crude and selling finished products for the 650,000 barrels per day capacity Dangote refinery.
The firm is expected to headed by an ex oil trader, Radha Mohan, who joined Dangote Group in 2021 as Director of international supply and trading
The Dangote refinery is one of the largest in the world and it has attracted the attention of the biggest oil trading firms in the world who have offered to provide working capital loans and feedstock crude in exchange for product supplies from the refinery.
It is understood that Dangote wants to have complete control over the products from the refineries and has so far rebuffed attempts by the oil traders to get a foothold in the refinery operations.
Dangote is reported to have met the biggest oil trading firms like BP, Trafigura and Vitol in Lagos. The firms have pledged up to $3billion in working capital loans to the refinery. Dangote is also said to have met with the state-owned oil firm, Nigerian National Petroleum Corporation (NNPC) in his search for crude and loans to run the refinery.
However, no deals have been struck as Dangote wants to go it alone in order to keep a tight rein on the operations and profits of the refinery.
The refinery is located in Lagos but still faces an uncertain trajectory in the supply of feedstock crude oil needed for its operations. Despite the location in Nigeria, one of the world’s biggest oil producers, Dangote refinery is not assured of adequate crude supplies from Nigerian sources. The size and scale of the refinery entails that it locks in supplies from as many sources as it can.
Dangote refinery recently announced the second shipment of 2million barrels of crude oil coming to the refinery from the United States.
The refinery is expected to significantly impact product supplies in the subregion and as far as Europe and Asia, once it starts producing at full capacity.
The Dangote refinery is estimated to have cost over $20 billion to build and is has so far taken over a decade to get to this stage.
