Dangote intends to use a London trading company for the refinery in Lagos

Aliko Dangote, the president of the Dangote Group, intends to establish an oil trading company with its headquarters located in London in order to manage the supply of crude and other products for his upcoming refinery in Lagos, Nigeria.

The enormous 650,000 barrel-per-day refinery is likely to redraw global oil and gasoline patterns, and the trading world is intently watching the way it will operate, according to six persons familiar with the matter who spoke with Reuters on Tuesday.

According to Punch Online, on May 22, 2023, Dangote officially opened the Dangote Petroleum Refinery at Ibeju-Lekki, Lagos.

A Reuters story on Tuesday said that the action would lessen the influence of the largest trading companies in the world, who have been negotiating for months to give the refinery funding and crude oil in exchange for product exports.

As of the time this story was filed, Dangote, whose wealth is estimated by Forbes to be $12.7 billion, had not responded to multiple Reuters requests for comment.

The refinery requires about $3 billion in working capital to purchase huge amounts of petroleum, and companies including BP, Trafigura, and Vitol have met with Dangote in Lagos and London in recent weeks to propose loans for this amount, trading sources told Reuters.

The sources claimed that although the traders wanted the refinery to repay debts with petroleum exports, they have not yet signed any agreements because Dangote fears this would lessen his influence over the business and maybe his profit.

In his chase for money and crude, Dangote has also engaged with state-backed companies.

Reuters was informed by an industry insider that “he is going to try and do it himself.”

The new trading team will be headed by Radha Mohan, a former Essar trader, sources told Reuters.

Based on his Linkedin profile, Mohan started working for Dangote in 2021 as the director of international supply and trading.

The team was reportedly employing two new traders, according to two sources.

According to a Reuters story, the Lagos refinery was completed in almost ten years, and its $20 billion cost was $6 billion above budget.

“It will take months for the plant to reach full capacity; between January and February, it refined about 8 million barrels of oil.”

According to people with information, Trafigura has exchanged some crude oil for upcoming gasoline cargoes, while Vitol has paid in advance for some product shipments to assist the refinery in purchasing crude. Vitol and Trafigura, both located in Geneva, declined to comment.