Melvin Onwubuke
Aliko Dangote, Africa’s wealthiest man, plans to set up an oil trading company in London which he will use for supply of petroleum and products from his new refinery in Nigeria.
This will reduce the role of world’s largest trading companies, who have been negotiating for months to finance a refinery and oil in return for exporting products. The world’s largest refinery, 650,000 barrels of oil per day, is about to redraw global energy flows and the trading community will be closely watching how it operates, according to Reuters.
During the last few weeks, BP, Trafigura and Vitol have been meeting with Dangote in Lagos and London to offer loans of around $3 billion for working capital needed by a refinery that buys huge quantities of oil, sources said.
The traders asked the refinery to repay loans with fuel exports but no deal has been signed yet, Dangote worries they would cut down on his control of the project – and likely his profit. In his search for cash and oil, Dangote has also reached out to indigenous firms.
It took nearly ten years to build the refinery, which cost $20 billion, costing approximately $6 billion more than the initial budget.
Between January and February, the plant refined about 8 million barrels of crude oil, and would take a few months for it to be fully operational.
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 declined to comment.
