Refineries in India have turned to Nigeria for the supply of crude oil following a drop in imports from Russia.

This came as the Dangote Petroleum Refinery in Lekki, Lagos, has successfully purchased its first shipment of one million barrels of Algeria’s high-quality light sweet Saharan Blend crude

Bloomberg reports that India’s crude oil imports from Russia witnessed a significant decline in February, reaching their lowest level since January 2023.

The report stated that the downturn follows the latest round of sanctions imposed by the United States and the United Kingdom on Russian energy firms and oil tankers, which have disrupted shipments to major buyers.

To cover the shortfall, Indian refiners turned to Nigeria, Angola, Mexico, and others for crude supply. According to data from Kpler, cited by Bloomberg, India’s crude imports from Russia dropped by 14.9 per cent compared to the previous month, averaging around 1.4 million barrels per day in February.

The report stated that the drop in Russian supplies was offset by increased purchases from other oil-exporting nations, primarily Iraq and Saudi Arabia. Iraqi shipments to India saw an 8.3 per cent rise, while “Indian refiners also turned to Nigeria, Angola, Mexico, and Colombia to compensate for the shortfall.”

It was gathered that the decline in Russian crude imports comes in the wake of fresh sanctions imposed in January by Washington and London. These measures targeted major Russian oil producers such as Gazprom Neft and Surgutneftegas, as well as 183 tankers involved in transporting Russian crude.

The restrictions have had a direct impact on India, the world’s third-largest oil importer, which heavily depends on seaborne shipments for its energy needs. Despite the sanctions, Bloomberg reports that Moscow has reaffirmed its commitment to supplying oil to global markets, including India.

Russian First Deputy Energy Minister, Pavel Sorokin, recently stressed that Russia remains determined to maintain its energy trade.

“We are pragmatic. We value our relationships, and we will continue to supply the market. Our resources are competitive from an economic standpoint,” Sorokin stated.

The PUNCH reports that as the leading oil-producing country in Africa, Nigeria ramped crude production to 1.5 million barrels per day in January, meeting its OPEC quota for the first time in three years.

Despite this, local refineries in Nigeria still complain of crude shortages.

The Dangote Petroleum Refinery, for instance, successfully purchased its first shipment of one million barrels of Algeria’s high-quality light sweet Saharan Blend crude oil, a report by Argus has revealed.

This marks a significant step for the refinery as it diversifies its crude oil supply sources and reaches its full daily refining capacity of 650,000 barrels.

The shipment, expected to arrive between March 15 and 20, marks the first time the refinery will be refining Algerian crude, a high-quality light sweet crude known for its low sulphur content and premium refining yields.

Saharan Blend crude, with an API gravity of 45.3 and just 0.1 per cent sulphur content, is highly sought after and traditionally exported to Europe.

The report said the refinery bought the shipment from trading firm Glencore last week but didn’t state the price as both parties didn’t directly confirm the purchase.

 “None of the tankers that have loaded in Algeria so far in February have flagged Africa as their destination, suggesting this cargo will load in March,” the report stated.

The report, quoting a trader, noted that Saharan Blend’s quality is suitable for the Dangote refinery and that it is competitively priced compared to Nigerian grades.

“Nearly 420,000 b/d of crude was delivered to Lekki for Dangote so far this year, with about 82 per cent of that made up of light sweet grades, Vortexa data show,” the report stated. It said Nigerian crude accounted for 87 per cent of all arrivals.

The March-loading trade cycle for Saharan Blend was slow to kick off due to sluggish demand in Europe because of seasonal refinery maintenance and ample light crude supply.

This may have encouraged buyers in Europe to hold off on purchases of Saharan Blend in anticipation of weaker price differentials, prompting sellers to look to alternative outlets.

Saharan Blend prices had dropped by $1/bl over this month when March-loading cargoes were trading and now stand at a 20¢/bl discount to the North.

Beyond Algeria, Dangote refinery has been exploring long-term crude supply agreements from international markets, including the United States and Brazil. Speaking last year, Aliko Dangote, the refinery’s founder, emphasised the need to look beyond local suppliers:

“We will start importing crude oil from African countries. When we get to those countries, we’ll start negotiating with them and bringing in supplies from there.”

However, he also pointed out that if Nigeria’s crude oil were readily available, there would be no need to look elsewhere.

Africa’s largest refinery, built by Aliko Dangote in Lagos, began processing crude into products, including diesel, naphtha, and jet fuel in January last year.