Africa's richest man, Aliko Dangote, is charting new territory by considering the establishment of an oil trading arm, potentially headquartered in London, to facilitate the operations of his upcoming refinery venture in Nigeria, sources close to the matter revealed.
This strategic move could sideline major global trading entities, which have been engaged in extensive negotiations for months, aiming to provide financial backing and crude oil supplies to Dangote's refinery in exchange for product exports. Anticipation is high within the trading community as the colossal 650,000-barrel-per-day refinery gears up to reshape global oil and fuel dynamics.
According to insiders speaking to Reuters, Dangote appears poised to take matters into his own hands. The newly proposed trading division is expected to be spearheaded by former Essar trader Radha Mohan, who assumed the role of director of international supply and trading at Dangote in 2021, as indicated by his LinkedIn profile. It is understood that the team is actively recruiting additional traders to bolster its ranks.
The construction of the refinery, a project spanning nearly a decade, incurred costs of approximately $20 billion, overshooting the initial budget by $6 billion. Despite these challenges, the facility has commenced operations, refining an estimated 8 million barrels of oil between January and February. However, reaching full operational capacity will require several more months.
To support the refinery's crude procurement, Vitol reportedly pre-paid for certain product cargoes, while Trafigura engaged in crude oil swaps for future fuel cargoes, according to informed sources. Both Vitol and Trafigura, headquartered in Geneva, declined to provide official statements.
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