Africa’s wealthiest individual, Aliko Dangote, is charting a strategic move to establish an oil trading arm, potentially headquartered in London, as part of his plans to oversee the crude and products supply operations for his newly constructed refinery in Nigeria, according to six sources familiar with the matter.
This development aims to diminish the influence of major global trading firms, including BP, Trafigura, and Vitol, which have engaged in prolonged negotiations to secure financing and crude oil supply for the colossal 650,000 barrel-per-day refinery. The refinery, with its substantial capacity, is poised to reshape global oil and fuel dynamics, drawing close attention from the international trading community.
In recent weeks, key players like BP, Trafigura, and Vitol have engaged in discussions with Dangote in both Lagos and London, presenting loan offers to cover the approximately $3 billion working capital required for the refinery’s crude oil procurement.
However, negotiations have encountered hurdles as Dangote, wary of relinquishing control and potential profit, has hesitated to sign agreements that would involve repaying loans with fuel exports. In his pursuit of financing and crude, Dangote has also explored partnerships with state-backed firms.
Sources revealed that Dangote is poised to take a more independent approach, establishing his own trading team. Radha Mohan, a former Essar trader who joined Dangote in 2021 as the director of international supply and trading, is expected to lead the new trading team.
While the team is reportedly in the process of hiring two additional traders, Dangote’s move underscores his determination to navigate the refinery’s operations autonomously.
The completion of the refinery, which incurred a decade-long construction period and exceeded its initial budget by $6 billion, has already refined approximately 8 million barrels of oil between January and February.
Vitol and Trafigura have played roles in facilitating crude oil purchases, with Vitol prepaying for certain product cargoes and Trafigura engaging in crude oil swaps for future fuel cargoes, as sources with knowledge disclosed. Both Geneva-based trading firms, Vitol and Trafigura, declined to comment on the matter.
