Nigeria's 650,000 b/d Dangote refinery has taken a significant step towards diversifying its crude supply by acquiring its first cargo of Algeria's premium Saharan Blend crude from trading firm Glencore. The 1 million-barrel shipment is expected to arrive between March 15-20, marking a key milestone in Dangote's crude supply diversification efforts as it scales up production.

The deal signals a growing shift towards emerging markets, with Nigeria's Dangote refinery now tapping into Algeria's premium crude to optimize its refining output. Saharan Blend, known for its high quality, boasts an API gravity of 45.3 and a low sulfur content of 0.1%, making it a highly sought-after grade. Sourced primarily from the Hassi Messaoud region, it is one of Algeria's top crude exports, traditionally supplied to European markets.

According to market sources, the deal was not directly confirmed by either party, and the price remains unknown. However, a trader noted that Saharan Blend's quality is well-suited for the refinery and is competitively priced compared to Nigerian crude grades. The cargo for Dangote refinery is expected to load in March, as tankers loaded in Algeria this February are not headed to Africa.

Dangote Refinery's hunt for crude oil has been ongoing, with the company exploring long-term crude supply contracts from international markets, including the United States. In September 2024, Dangote Refinery reached an agreement with the Nigerian National Petroleum Company Limited (NNPCL) for the supply of 15 cargoes of crude oil. However, only six cargoes were allocated by NNPC, prompting the refinery to seek additional supply from International Oil Companies (IOCs) operating in Nigeria.

When the refinery approached IOCs for additional supply, it was either directed to their international trading arms or informed that existing cargoes were already committed elsewhere. As a result, the refinery has had to purchase the same Nigerian crude from international traders at an additional $3-$4 premium per barrel, translating to $3-$4 million per cargo.

In response to the crude supply challenges, Dangote Refinery's CEO and founder, Aliko Dangote, announced last year that the company would begin sourcing crude oil from other African oil-producing nations. "We will start importing crude oil from African countries. When we get to those countries, we'll start negotiating with them and bringing in supplies from there," Dangote stated.

He further emphasized that while the refinery has already purchased crude from the U.S. and Brazil, the scope will expand to include more African suppliers. However, he noted that if crude oil were readily available in Nigeria, there would be no need to source from external markets.

The deal with Glencore marks a significant step towards achieving this goal, as Dangote Refinery continues to diversify its crude supply and optimize its refining output. As the company scales up production, this shift towards emerging markets is likely to have a significant impact on the global energy landscape.

In conclusion, Dangote Refinery's acquisition of 1 million barrels of Saharan Blend crude from Glencore signals a significant shift towards emerging markets and diversification of crude supply. As the company continues to explore new sources of crude oil, it is likely to have a profound impact on the global energy industry, particularly in Africa.