Nigeria’s major Dangote oil refinery is reselling cargoes of U.S. and Nigerian crude due to technical problems, four trade sources confided to Reuters on Friday. Three of the sources linked the resales to operational issues at the refinery.
However, a Dangote executive maintained that the crude distillation unit (CDU) is operational despite market rumours.
The refinery, which began production in January, is poised to become the largest in Africa and Europe upon reaching full capacity. This development could disrupt the profitable Europe-to-Africa fuel trade and position Nigeria as a fuel exporter.
The crude grades being resold include Nigerian Escravos and Forcados, as well as U.S. WTI Midland crude.
Traders have noted that the refinery has been importing several crude cargoes monthly. While such resales by refineries are rare, they are not unprecedented.
Following the news, crude prices experienced a decline. Brent crude dropped by as much as 2.5% towards $80 a barrel before recovering to above $81 by 1700 GMT.
The 650,000 barrel-per-day refinery, built at a cost of $20 billion by Africa’s richest man, Aliko Dangote, aims to reduce Nigeria’s dependence on fuel imports despite being Africa’s largest oil producer.
