Africa’s wealthiest individual, Aliko Dangote, is considering establishing an oil trading division, potentially based in London, to oversee the supply of crude oil and products for his newly built refinery in Nigeria, according to six sources familiar with the matter.
This move aims to diminish the influence of major global trading firms, such as BP, Trafigura, and Vitol, which have been in prolonged negotiations to provide financing and crude oil in exchange for product exports from the colossal 650,000 barrel-per-day refinery.
The refinery, valued at $20 billion, has faced delays and cost overruns, completing nearly a decade after initiation. Dangote, with an estimated wealth of $12.7 billion, has engaged in discussions with these trading giants, who offered loans for the refinery’s required $3 billion working capital. However, Dangote is hesitant to commit to agreements that may compromise his control and potential profits. To spearhead the oil trading arm, Dangote is reportedly relying on the expertise of former Essar trader Radha Mohan, who joined in 2021 as the director of international supply and trading.
The refinery, operational since January, has faced financing challenges, with Vitol and Trafigura making prepayments and swaps to assist in procuring crude and product cargoes. The establishment of an in-house trading team reflects Dangote’s inclination to manage crucial aspects independently amid ongoing complexities in the global oil and fuel markets.