Aliko Dangote, the wealthiest man in Africa, intends to establish an oil trading arm, possibly headquartered in London, to assist in managing the supply of crude and other products for his new refinery in Nigeria, Western media reported on Tuesday, citing sources familiar with the matter.
The decision would reportedly diminish the influence of the largest global trading companies, which have been in talks for months to provide the refinery with financing and crude oil in return for exporting goods.
Major energy companies — including Singaporean Trafigura, UK's BP and Swiss-Dutch Vitol — have recently met with Dangote in Lagos and London to provide loans for the approximately $3 billion in working capital the refinery needs to buy significant amounts of crude oil, trading sources told the media.
The traders asked the refinery to settle loans by exporting fuel. However, no agreements have been reached as Dangote is concerned that this could reduce his control over the project and potentially his earnings, according to the media's sources. The tycoon has also reportedly engaged with government-supported companies in order to get funding and crude.
The refinery took about ten years to build and came in $6 billion over budget at a total cost of $20 billion.
Between January and February, the factory processed almost 8 million barrels of oil and will require months to reach full capacity. Vitol has made prepayments for product shipments to assist the refinery in purchasing crude oil, while Trafigura has exchanged crude oil for future fuel cargoes, according to the media.
The Dangote Petroleum Refinery and Petrochemical Project, located in the Dangote Industries Free Zone, Lagos, has the capacity to refine 650,000 barrels of crude oil per day, making it the largest oil refinery on the African continent and a major player in global oil and fuel distribution.
In mid-February, the media reported that the plant was preparing to export its first fuel shipments, marking a significant milestone for the newly operational facility. The first shipment of 65,000 tonnes of low-sulfur straight-run fuel oil has been reportedly contracted to Trafigura.