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NNPC to supply Dangote refinery with crude oil, reports say

NNPC to supply Dangote refinery with crude oil, reports say

Nigeria’s state oil firm, NNPC Ltd, will supply the new 650,000 barrel-per-day Dangote oil refinery with up to six cargoes of crude oil in December to be used in test runs.

NNPCL, on Thursday, said it was set to provide six million barrels of crude oil to the refinery.

Punch and Reuters referred to anonymous insiders who revealed the plan.

“In a major step towards boosting domestic refining and attaining energy security, NNPC Ltd is set to allocate six million barrels of crude oil to Dangote Refinery in December 2023,” Punch quoted a top official of the oil firm to have stated.

The official added, “This development came as plans have since been firmed up for the signing of a sales and purchase Agreement between the national oil company and the refinery, taking place soon in Abuja.”

The refinery, funded by Aliko Dangote, is expected to transform oil trading in the Atlantic Basin and remove a lucrative outlet for fuels produced in Europe and the United States that have for years powered the cars, trucks and generators on the continent.

The refinery is in the Lekki free trade zone near Lagos. Once it is fully up and running, it will turn oil powerhouse Nigeria into a net exporter of fuels, a long-sought goal for the OPEC member that is currently almost totally reliant on imports.

One of the sources, an NNPC official, who declined to be named, specified six cargoes, or 200,000 bpd, would be supplied in December as part of a one-year deal, adding that volumes in future months would be supplied “based on mutual agreement and availability”.

The other sources said about 4-5 cargoes, or at least 130,000 bpd, were planned. A Dangote Group official, who did not wish to be named, said “some of the agreements have confidentiality clauses” without elaborating when asked about the NNPC supply deal.

NNPCL has a 20% stake in the refinery.

The refinery began the commissioning process in May this year after running years behind schedule at a cost of $19 billion, above initial estimates of $12-14 billion.

Commissioning includes testing the different units that make products from gasoline to diesel and making sure they respond to the control panels.

Meanwhile, insiders close to both parties confirmed that the deal was purely on a commercial basis and without any recourse to discount, or selling at rock-bottom prices, as speculated by a section of the media.

 

Punch/Reuters

 

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