Home » Aliko Dangote explores independent oil trading venture for $20-billion refinery

Aliko Dangote explores independent oil trading venture for $20-billion refinery

This development marks a significant departure from traditional practices in the petroleum industry

by Omokolade Ajayi
Aliko Dangote

In a strategic move following the operational launch of the $20 billion Dangote Oil Refinery, Aliko Dangote, Africa’s richest man, is reportedly in the process of establishing an independent oil trading division, potentially headquartered in London.

This development marks a significant departure from traditional practices in the petroleum industry, as Dangote aims to streamline the management of the crude and product supply chain for his $20 billion Petrochemical complex in Nigeria.

Industry insiders informed Reuters that Dangote aims to reduce the reliance on major trading firms by handling the crude and product supply chain internally. A source stated, “He is going to try and do it himself.” The newly formed trading team, reportedly led by ex-Essar trader Radha Mohan, is in the process of recruitment, with plans to hire two additional traders.

The $20-billion Dangote Oil Refinery, commissioned to revolutionize Nigeria’s energy landscape, seeks to fulfill 100 percent of the country’s demand for refined petroleum products, including petrol, diesel, kerosene, and jet fuel.

With a potential shift from being a fuel importer to a net exporter to West African countries, the refinery is poised to enhance Nigeria’s energy security and become a significant player in the global fuel market.

BP, Trafigura, and Vitol extend $3 billion in loans for Dangote’s ambitious petrochemical complex

BP, Trafigura, and Vitol, among other major entities, have engaged with Dangote, proposing loans in both Lagos and London. These loans, totaling approximately $3 billion in working capital, are intended to support the refinery’s purchase of substantial volumes of crude oil.

The trading firms have suggested that fuel exports could serve as a means of repaying the loans, but Dangote’s move towards an independent trading division indicates a potential shift in this negotiation landscape.

This strategic maneuver by Dangote is expected to bring about a significant transformation in power and profit dynamics within the petroleum industry, as the Dangote Petrochemical Complex aims for an annual revenue projection of $27 billion at full capacity.

The complex is not only set to meet Nigeria’s entire demand for refined petroleum products but also signifies the nation’s emergence as a major fuel exporter in the West African region. As the trading dynamics evolve, attention is now on how this shift will impact global players in the oil and gas industry.

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