Dangote moves to solidify control of oil refinery
ALIKO Dangote, Africa’s richest man is looking to set up an oil trading arm, probably based in London, to operate the crude and product supplies for his new refinery in Lagos, Nigeria.
This move is to ensure that Dangote has full autonomy over the business. Several corporations met with the billionaire to discuss terms of loans they could proffer to the refinery.
Reuters reported that Dangote is set to establish a trading arm for his refinery according to six sources close to the story.
The move is intended to lessen the leverage of some of the world’s largest trading corporations, who have been negotiating for months to provide the refinery with money and crude oil in return for product exports.
BP, Trafigura, and Vitol are among the corporations that have met with the billionaire in recent weeks to discuss terms for loans for the refinery’s estimated US$3 billion in working capital required to purchase big volumes of petroleum, according to trading sources. These corporations met with Dangote in places like Lagos and London.
The traders desired for the refinery to settle loans with fuel exports, but no deals were made because Dangote recognised that doing so could undermine his control of the business — possibly reducing his profit, according to sources.
Dangote has also engaged with state-owned companies in his pursuit of cash and crude.
“He is going to try and do it himself,” an industry source said . The source also revealed that the new trading team will be overseen by ex-Essar dealer Radha Mohan.
As it stands, Vitol has pre-paid for certain product shipments to assist the refinery in purchasing crude, while Trafigura has swapped some crude oil for future gasoline cargoes, according to sources.
The US$20,5 billion Dangote refinery, Africa’s largest, which was built over the course of 2 decades, has a processing capacity of 650 000 barrels per day. It aims to produce 250 000 barrels per day of gasoline and 100 000 barrels per day of gasoline and diesel.
The refinery would produce oil for both local consumption and international trade. Already, 150 000 fuel stations run by the Independent Petroleum Marketers Association of Nigeria (IPMAN) have been sanctioned to receive fuel supplies from the newly built private Dangote refinery.
The 650 000 barrel-per-day capacity refinery is set to influence the global oil and fuel flows, as the trading community watches to see how significant this influence would be.
So far, the refinery has processed around 8 million barrels of oil between January and February, according to Reuters, and will take months to reach full capacity. — Business Insider Africa.