A scarcity of crude oil may cause Dangote Oil Refinery's much-anticipated July entry into the gasoline supply market to be delayed, an industry insider has said.

The source said this amid worries that Aliko Dangote may not be able to reach its goals for refining gasoline due to a shortage of easily accessible crude oil.

July prediction uncertain

The Lekki, Lagos-based refinery, with a 650,000 barrels per day (bdp) capacity, was supposed to start operating in July. Its goal is to lower Nigeria's dependency on imported fuel drastically.

A source in the oil trading business told BusinessDay “The refinery has yet to receive the required volumes of crude oil needed to refine PMS for the July takeoff.”

According to Jide Pratt, country manager of Trade Grid, the Dangote refinery is unlikely to make the July deadline, which supports a large network of independent dealers throughout Africa.

Pratt said, “The issue of crude supply is still a major issue, and postulations on how the premium motor spirit (PMS) will be sold in USD are unattended to.”

“A safe assumption may be August or September at best and December at worst.”

“It’s clear that subsidy still exists and the possibility of selling to NNPC is reduced, as it currently has trade account receivables with traders over 160 days. The Dangote Refinery is a commercial entity and will unlikely toe this line of credit sales with its running cost and interest payments.”

To date, Dangote Refinery has only taken delivery of Nigerian and US crude grades. Still, it could increasingly seek alternative term contracts with other supply sources as it scales production, traders have speculated.

One source said, “It’s not unexpected that they would seek to cover base requirements for the refinery through term business in the same way that some Indian refiners do with Middle Eastern crude.”