Nigeria's Dangote Refinery Reselling Crude Amid Technical Issues, reports say

Nigeria's major Dangote oil refinery is reselling cargoes of U.S. and Nigerian crude, according to four trade sources familiar with the matter. Three of these sources linked the reoffer to technical problems at the refinery. Despite market talk about operational issues affecting the crude distillation unit (CDU), a Dangote executive confirmed that the CDU is in operation.

The refinery, which started production in January, is set to become the largest in Africa and Europe once it reaches full capacity.

This development could disrupt the highly lucrative Europe-to-Africa fuel trade and transform Nigeria into a fuel exporter. Sources reported that cargoes of Nigerian Escravos and Forcados crude, as well as U.S. WTI Midland crude, were among the grades being offered. Traders have noted that the plant has been importing several crude cargoes monthly.

While resales by refineries are rare, they are not unheard of, according to traders. The news impacted crude prices, with Brent crude falling as much as 2.5% towards $80 a barrel, though it recovered to above $81 by 1700 GMT.

The 650,000 barrel-per-day refinery, built at a cost of $20 billion by Africa's richest man Aliko Dangote, aims to reverse Nigeria's reliance on fuel imports despite being Africa's biggest oil producer.