Faith Nyasuguta
Africa’s wealthiest individual, Aliko Dangote, is strategizing to establish an oil trading division, potentially based in London, to manage crude and product supply for his newly constructed refinery in Nigeria, according to six sources familiar with the matter.
The move aims to diminish the influence of major trading firms that have been in protracted negotiations to secure financing for the refinery and provide crude oil in exchange for product exports.
Dangote, whose fortune is estimated at $12.7 billion by Forbes, has not responded to numerous requests for comments on this development. The colossal 650,000 barrel-per-day refinery, poised to reshape global oil and fuel dynamics, has drawn attention from the trading community eager to discern its operational dynamics.
Major trading entities, including BP, Trafigura, and Vitol, among others, engaged in discussions with Dangote in Lagos and London to extend loans for the refinery’s substantial $3 billion working capital needs for procuring significant quantities of crude.
While the trading firms proposed loan repayment through fuel exports, no deals have materialized thus far, as Dangote is concerned about relinquishing control and potential profit, according to sources.
Dangote has explored conversations with state-backed entities in his quest for funding and crude resources. Intent on handling the trading aspect independently, Dangote is establishing a new trading team, reportedly led by former Essar trader Radha Mohan.
Mohan, who joined Dangote in 2021 as the Director of International Supply and Trading, is overseeing the recruitment of two additional traders, according to sources.
The construction of the refinery, a nearly decade-long endeavor that incurred a cost of $20 billion, $6 billion over budget, has been closely monitored by the industry.
The refinery has processed around eight million barrels of oil between January and February, with plans to achieve full capacity in the coming months.
To support the refinery’s crude purchases, Vitol has pre-paid for specific product cargoes, while Trafigura has engaged in crude oil swaps for future fuel cargoes, as per knowledgeable sources. Both Vitol and Trafigura have declined to comment on these developments.
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