Dangote Considers $3 Billion Loan From Vitol, BP, Trafigura Amid Plan to Establish Oil Trading Unit
- Aliko Dangote is planning on setting up a trading arm to ensure smooth supply of his new refinery
- The action will ensure that the role of the world's biggest trading firms is minimal in the operations of the plant
- The world trading firms had approached Dangote, offering him roughly $3 billion in working capital needed by the refinery
Legit.ng journalist Zainab Iwayemi has over three years of experience covering the Economy, Technology, and Capital Market.
The richest man in Africa, Aliko Dangote, intends to establish an oil trading company, probably headquartered in London, to assist in managing the supply of crude and products for his new refinery in Nigeria, according to people with knowledge of the situation.
Source: UGC
This means that the largest trading companies in the world would have minimal influence on the refinery's operations.
According to Reuters, these companies have been negotiating for months to give the refinery funding and crude oil in exchange for product exports.
Trading sources told the news agency that BP, Trafigura, and Vitol, among others, met with Dangote in Lagos and London recently to provide $3 billion in working capital the refinery needs to purchase significant amounts of crude.
The sources claimed that although the traders wanted the refinery to repay debts with petroleum exports, they had not yet signed any agreements because Dangote feared this would lessen his influence over the business and maybe his profit.
Dangote has also engaged with state-backed companies in his chase for cash and crude.
"He is going to try and do it himself," an industry source told Reuters.
Sources told Reuters that Radha Mohan, a former Essar trader, will head the new trading team. LinkedIn lists him as having joined Dangote in 2021 as director of international supply and trading.
According to two sources, the group was in the process of appointing two new dealers.
Reuters reported that it will take months for the plant to reach total capacity, refining about 8 million barrels of oil between January and February.
To date, Trafigura has exchanged some crude oil for upcoming gasoline cargoes. At the same time, Vitol has paid in advance for some product shipments to assist the refinery in purchasing crude, according to people with knowledge.
The trading community is closely observing how the massive refinery, which can produce 650,000 barrels of fuel per day, will reshape global oil and fuel flows.
In a recent report, S&P Global has estimated that the Dangote oil refinery may not reach a full complement of its operations until somewhere around the middle of 2025.
This contradicted earlier projections that the Dangote Refinery may start producing 650,000 barrels per day at total capacity by the second quarter of 2024.
In an update on Nigeria, the new report stated that the recent partial commencement of operations was critical to the growth of the Nigerian economy.
Dangote set to launch another project
Legit.ng reported that Dangote, chairman of the Dangote Group, has presented an 11-point industrialisation strategy for Nigeria.
Dangote stated that a knowledge-based system will drive the 11-point master plan at the 38th convocation lecture of Bayero University Kano during the weekend.
He said in a Guardian report that moving from resource-based, production-focused economies to knowledge-based economies is intricate and multidimensional.
PAY ATTENTION: Stay Informed and follow us on Google News!
Source: Legit.ng
