Dangote Refinery Secures Major Crude Oil Supply Agreement With TotalEnergies

Dangote Refinery Secures Major Crude Oil Supply Agreement With TotalEnergies

  • Multinational energy company TotalEnergies has entered a landmark crude oil supply deal with Dangote Refinery
  • According to the CEO of TotalEnergies, both companies have met and have progressed toward finalising the deal
  • Aliko Dangote said that the refinery will also export to other African countries once it reaches its full operation

Legit.ng journalist Victor Enengedi has over a decade's experience covering Energy, MSMEs, Technology and the stock market.

Patrick Pouyanne, CEO of TotalEnergies, has disclosed that the leading French energy company, has finalised an agreement to supply the Dangote Refinery with crude oil.

This announcement followed a meeting with Aliko Dangote, the refinery's major owner and Africa's wealthiest individual.

TotalEnergies and Dangote ink crude supply agreement
Dangote stated that the refinery has sufficient capacity to provide gasoline, diesel, and aviation fuel for the entire African continent. Photo credit - Le Monde, IG, Dangote Group
Source: UGC

Dangote has been working to obtain crude oil for his refinery, which, once fully operational, will be the largest in Africa and Europe, with a capacity of 650,000 barrels per day.

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Recently, Legit.ng reported that Dangote Refinery was preparing to import 24 million barrels of crude oil from the United States over the next year.

TotalEnergies, Dangote to ink crude supply deal

According to Reuters, Pouyanne shared at the Africa CEO Forum in Kigali, Rwanda, that the two executives have progressed toward finalising the deal.

Pouyanne said:

“We met this morning, we made the first deal between both of us.
“The two CEOs met with our head of trading and we found the way to convince them to make a deal.”

According to a tender document reviewed by Reuters, the company issued a tender in May for a monthly supply of two million barrels of West Texas Intermediate (WTI) Midland crude for a year starting in July.

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The refinery, which began operations in January, was constructed at a cost of $20 billion. Despite being Africa's largest oil producer, Nigeria relies heavily on imported fuel and other refined products.

Dangote's goal is to change this dynamic. He stated that the refinery has sufficient capacity to provide gasoline, diesel, and aviation fuel for the entire African continent and also export to Brazil.

Dangote told the panel:

“We started producing jet fuel, we are producing diesel, by next month, we’ll be producing gasoline. What that will do, it will be able to take most African crudes."

He mentioned that the refinery's capacity exceeded Nigeria's needs and would be able to supply fuel to West, Central, and Southern Africa.

Dangote indicated that the next phase of the refinery project was set to commence early next year.

Alongside Shell, Exxon, and Chevron, TotalEnergies is a significant crude oil producer in Nigeria.

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Speaking on the matter, Wale Ogundeji, an energy analyst told Legit.ng that the Dangote Refinery securing crude oil from abroad offers several significant benefits.

He said:

"Firstly, it ensures a consistent supply of raw materials, mitigating risks associated with local production fluctuations or disruptions. This can lead to more stable refinery operations and product availability.
"Secondly, it allows the refinery to potentially access crude oil at competitive prices, optimizing production costs.
"Thirdly, diversifying crude oil sources enhances the refinery's resilience to geopolitical and market volatility."

He added that overall, these advantages contribute to improved operational efficiency, cost-effectiveness, and market stability, positioning the Dangote Refinery as a robust player in the global oil industry.

NUPRC gives oil firms strict orders on Dangote

In related news, Legit.ng reported that the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) ordered oil companies in Nigeria to supply about 483,000 barrels of crude oil daily to local refineries.

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No more importation: Aliko Dangote speaks on its refinery plans, gives Nigerians hope

The initiative is part of Nigeria's efforts to ensure regular supply to local refiners for domestic consumption.

About six local refineries, including Nigeria's three in Port Harcourt, Warri, and Kaduna, are expected to begin production in 2024.

Proofreading by Nkem Ikeke, journalist and copy editor at Legit.ng.

Source: Legit.ng

Victor Enengedi avatar

Victor Enengedi (Business HOD) Victor Enengedi is a trained journalist with over a decade of experience in both print and online media platforms. He holds a degree in History and Diplomatic Studies from Olabisi Onabanjo University, Ogun State. An AFP-certified journalist, he functions as the Head of the Business Desk at Legit. He has also worked as Head of Editorial Operations at Nairametrics. He can be reached via victor.enengedi@corp.legit.ng and +2348063274521.

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