Some oil companies are negotiating with the Dangote Petroleum Refinery to buy stakes in the company as a means to secure off-take for their oil production analysis shows.
Last week, it was reported that four oil companies including Nigeria’s state-oil company the Nigerian National Petroleum Corporation (NNPC) have approached Dangote Industries to acquire a stake in the refinery it is building.
Devakumar Edwin, group executive director, told Reuters that the firms from Western and Middle East countries and involved in trading and crude production were looking to secure crude supply agreements, a similar objective to that pursued by the NNPC.
This fear is being driven largely by the impending energy transition which last week saw boards of several oil companies forced to face a day of reckoning.
American oil giant ExxonMobil has lost a bruising fight to keep its board intact as some of its shareholders forced the oil company to reckon with the impacts of its operation on the environment.
Activist investor Engine No. 1 LLC successfully ousted two directors at the company’s annual shareholder meeting on Wednesday to compel Exxon to embrace a transition away from fossil fuels and power towards a greener energy strategy.
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Another oil major was also forced to face the reality of energy transition through a court ruling. For the first time in history, the Hague District Court ruled that Royal Dutch Shell must slash its greenhouse gas emissions 45 percent by 2030 from 2019 levels.
Milieudefensie, the Dutch arm of Friends of the Earth, filed the closely watched lawsuit in 2019. Six environmental groups and more than 17,000 Dutch citizens joined the complaint, which alleged that Shell’s business practices violated human rights laws in the Netherlands and the European Union.
“This is a turning point in history,” Roger Cox, a lawyer for the nonprofit Friends of the Earth Netherlands, said in a statement after the decision.
“This case is unique because it is the first time a judge has ordered a large polluting corporation to comply with the Paris Climate Agreement. This ruling may also have major consequences for other big polluters.”
Analysts say this shift will not only propel the drive towards energy transition but will increasingly force oil producers to seek new partnerships like the scramble for stakes in Dangote Refinery.
The reality of energy transition is reverberating across the energy landscape.
“For the Big Oil Companies and their shareholders, it is no longer about whether they like to align their models and portfolios with the global energy transition or not, it is now both ethical and moral requirements to align their operational interests with the global decarbonisation agenda,” said Uchenna Obi, a clean energy expert based in the United Kingdom.
Dangote Refinery has said that it is not looking for equity and and wants to be able to secure crude from the market but discussions are not concluded.
The 650,000 barrels per day (bpd) Dangote Refinery is expected to process a variety of light and medium grades of crude, including petrol and diesel as well as jet fuel and polypropylene.
