The Dangote Refinery has exported two fuel cargoes first from the newly inaugurated refinery, according to a report by Reuters, quoting sources with knowledge of the matter.
While sources told Reuters on Wednesday that the tenders for the sale have been issued, it was later gathered that the sale of the products had already taken place.
With a nameplate capacity of 650,000 barrels per day, the Dangote Refinery was built on a peninsula on the outskirts of the commercial capital Lagos by the continent’s richest man, Aliko Dangote.
Nigeria has for years relied on expensive imports for nearly all the fuel it consumes but the $20 billion refinery is set to turn it into a net exporter of fuel to other West African countries, in a huge potential shift of power and profit dynamics in the industry, the report said, adding that Dangote declined its request for comment.
The first cargo is 65,000 metric tons of low sulphur straight run fuel oil, which Dangote awarded to Trafigura and was due to load at the end of February, three of the sources said, even though it was gathered that the deal had already been consummated. Trafigura also declined to comment.
At least one refiner said they had been offered the cargo by Trafigura without elaborating further.
The second tender is for about 60,000 tons of naphtha, three other sources said. Two of them added that the tender closes on February 15. Loading details were not immediately available.
Reuters quoted sources to have said last week that the refinery was preparing to deliver its first fuel cargoes to the domestic market within weeks.
The two fuels on offer are typical products of running light sweet crude through a crude distillation unit (CDU) in a refinery without further upgrading capacity. It is expected to take months for upgrading units to be brought online, experts have said.
The refiner began buying crude in December last year and Nigeria’s state-owned oil firm NNPC Ltd has been the main supplier. Dangote has also purchased some U.S. oil and is expected to receive 2 million barrels of U.S. WTI Midland in early March, according to LSEG and Kpler ship tracking.
Meanwhile, oil majors are targeting new oil fields that can be profitable even if oil prices fall to about $30 per barrel, using a third year of rising demand to reshape portfolios amid uncertainty over the industry’s future.
Investors have not returned to oil stocks despite recent high earnings. Even the world’s lowest-cost oil producer, Saudi Aramco has joined the rush to cut costs.
The shift to fields with favourable break-even points follows deeper and more frequent boom-cycles in the last decade. It also reflects executives’ belief that current high prices may not last, Reuters said.
“After three major oil price crashes in 15 years, there is wide acceptance that another one is likely to happen,” said Alex Beeker, director of corporate research at energy consultancy Wood Mackenzie.
That uncertainty and inventor demands for returns underpin executives’ focus on buying lower-cost crude production and the flexibility to adjust output in response to price swings. Exxon Mobil and Chevron, last year spent more on shareholder pay-outs than on new oil projects, a sign of the industry’s desire to regain investor favour.
The energy sector accounted for just 4.4 percent of the overall weighting of the S&P 500 Index of top U.S. publicly traded companies as of January 30, according to S&P Global, down from nearly three times that a decade ago.
Exxon, Chevron and Occidental Petroleum (OXY.N), recently struck deals worth a combined $125 billion to acquire companies that will help them pump oil for between $25 and $30 per barrel.
In Europe, Shell and Equinor are pursuing projects with $25-30 per barrel break-evens, while France’s TotalEnergies aims to get its production costs under $25.
Nigeria has one of the highest cost per barrel production in the world, but operators have recently said they plan to reduce it to less than $30 in recent months.
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