• Thursday, April 18, 2024
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Dangote wants to set up trading arm for Lagos mega refinery

Dangote wants to set up trading arm for Lagos mega refinery

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

The move 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 product exports.

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.

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

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

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

“He is going to try and do it himself,” an industry source told Reuters. Sources told Reuters that the new trading team will be led by ex-Essar trader Radha Mohan. He joined Dangote in 2021 as director of international supply and trading, according to his LinkedIn profile. 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 declined to comment.