Reuters: Dangote to Establish Oil Trading Arm for Lagos Mega Refinery

Emmanuel Addeh in Abuja

Africa’s richest man, Aliko Dangote, is planning to set up an oil trading arm, likely based in London, to help run crude and products supply for his new refinery in Nigeria, six sources familiar with the matter have told Reuters.

The move, it said, would reduce the role of the world’s biggest trading firms, which have been negotiating for months to provide the refinery with financing and crude oil in exchange for products exports.

According to the report, the giant 650,000 barrel-per-day refinery is set to redraw global oil and fuel flows and the trading community is closely watching the way it will operate.

It said that Dangote, whose wealth is estimated by Forbes at $12.7 billion, did not reply to several comment requests.

Trading sources told Reuters that that BP, Trafigura and Vitol, among others had met Dangote in Lagos and London in recent weeks to offer loans for some $3 billion in working capital the refinery needs to buy large amounts of crude.

The traders, the report noted, asked the refinery to repay loans with fuel exports but that so far, they have signed no deals.

 It explained that this is because Dangote worries they would reduce his control of the project – and potentially his profit, the sources said. Dangote has also met state-backed firms in his search for cash and crude, it stated.

“He is going to try and do it himself,” an industry source told Reuters. Sources told Reuters the new trading team will be led by ex-Essar trader Radha Mohan.

 Mohan joined Dangote in 2021 as director of international supply and trading, according to his Linkedin profile, quoted the report. Two sources said the team was in the process of hiring two new traders.

The refinery took nearly a decade to complete and came in at a cost of $20 billion, some $6 billion over budget.

The plant has refined around 8 million barrels of oil between January and February and will take months to get to full capacity.

So far, Vitol has prepaid for some product cargoes to help the refinery buy crude, while Trafigura has swapped some crude oil in exchange for future fuel cargoes, sources with knowledge said. Geneva-based Vitol and Trafigura also declined to comment.

Vitol operates as an energy and commodities company which offers crude oil and product trading, shipping, refining, terminals and storage, downstream, upstream, gas and power, renewables, and investments services.

Trafigura, the third-largest physical commodities trading group in the world behind Vitol and Glencore, sources, stores, blends and transports raw materials including oil and refined petroleum products.

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