Dangote’s London Trading Firm: A Game Changer for Nigeria’s Oil Industry

President of Dangote Group, Aliko Dangote, has announced plans to establish an oil trading firm in London.

This strategic decision comes as part of efforts to manage crude and product supply for his new 650,000 barrel-per-day refinery in Lagos, Nigeria.

The giant refinery is set to reshape global oil and fuel flows, and the trading community is closely watching its development.

According to a Reuters report, the move could potentially reduce the role of the world’s biggest trading firms, which have been negotiating for months to provide the refinery with financing and crude oil in exchange for product exports.

Despite having an estimated wealth of $12.7 billion, as reported by Forbes, Dangote has not replied to several comment requests.

In recent weeks, major companies like BP, Trafigura, and Vitol have met with Dangote in both Lagos and London, offering loans for the $3 billion in working capital the refinery needs to purchase large amounts of crude.

However, no deals have been signed as of yet, with Dangote expressing concerns that these arrangements might diminish his control over the project and its potential profit.

Dangote has also met with state-backed firms in his search for cash and crude. Industry sources have noted that “he is going to try and do it himself,” indicating his determination to maintain control over the project.

The new trading team will be led by former Essar trader, Radha Mohan, who joined the company in 2021 as director of international supply and trading.

The Lagos refinery, which took nearly a decade to complete and cost $20 billion, is now refining around 8 million barrels of oil between January and February.

It is expected to take several months to reach full capacity. So far, companies like Vitol and Trafigura have prepaid for some product cargoes to help the refinery buy crude, while also swapping some crude oil in exchange for future fuel cargoes.

As the world watches the development of Dangote’s London trading firm and the impact it will have on global oil and fuel flows, it is clear that this ambitious project has the potential to significantly impact Nigeria’s oil industry and the broader global market.