The Dangote Oil Refinery has reiterated its stance that the facility is not receiving sufficient feedstock from domestic producers, despite existing agreements on crude oil supply, worsened by the current crude oil shortages.
In a statement on Thursday, Anthony Chiejina, the Group Chief Branding and Communications Officer of Dangote, pointed out that the Nigerian Upstream Regulatory Commission (NUPRC) has failed to adequately enforce domestic crude supply obligations.
Chiejina’s remarks were in response to allegations that the refinery had retracted its position by acknowledging that the Nigerian National Petroleum Company Limited (NNPCL) supplied about 60 percent of the 50 million barrels it had lifted. These claims were reportedly made during a Senate committee hearing investigating alleged sabotage in the oil and gas sector.
“To clarify, we have never accused NNPC of not supplying us with crude. Our concern has always been NUPRC’s reluctance to enforce the domestic crude supply obligation and ensure that we receive our full crude requirement from NNPC and the international oil companies,” Chiejina stated.
He further detailed the refinery’s current challenges: “For September, our requirement is 15 cargoes, of which NNPC allocated six. Despite appealing to NUPRC, we’ve been unable to secure the remaining cargoes. When we approached IOCs producing in Nigeria, they redirected us to their international trading arms or responded that their cargoes were committed.”
Chiejina reiterated that the refinery is often forced to purchase Nigerian crude from international traders at a $3-$4 premium per barrel, translating to $3-$4 million per cargo. “We therefore still insist that we are unable to secure our full crude requirement from domestic production and urge NUPRC to fully enforce the domestic crude supply obligation as mandated by the PIA,” he concluded.
Earlier, the Dangote Group’s management alleged that international oil companies (IOCs) were obstructing crude supply to the 650,000-barrel-per-day refinery. The group claimed that the IOCs insisted on selling crude oil to the refinery through their foreign agents, leading to increased local crude prices due to the trading arms offering cargoes at a $2 to $4 per barrel premium over NUPRC’s official price.
The group also alleged that foreign oil producers seem to prioritise selling Nigerian crude to Asian markets over local refiners.
DVG Edwin, Vice President of Oil and Gas at Dangote Industries Limited, emphasised: “If the Domestic Crude Supply Obligation guidelines are diligently implemented, this will ensure that we deal directly with the companies producing the crude oil in Nigeria as stipulated by the Petroleum Industry Act.”
Edwin insisted that IOCs operating in Nigeria have consistently hindered the refinery’s efforts to secure locally-produced crude as feedstock. He noted that the trading arms sometimes offer cargoes at a $2 to $4 per barrel premium above the official price set by the Nigerian Upstream Petroleum Regulatory Commission.
Edwin’s comments came in response to a statement by Gbenga Komolafe, the Chief Executive of NUPRC, who said in a national television interview: “It is ‘erroneous’ for one to say that the International Oil Companies are refusing to make crude oil available to domestic refiners, as the Petroleum Industry Act has a stipulation that calls for a willing-buyer, willing-seller relationship.”
Farouk Ahmed, the Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), also rejected claims that Nigeria could rely heavily on the Dangote refinery for its fuel supply. Ahmed noted that Dangote diesel has a higher sulphur content than imports and claimed that the refinery had requested the regulator to stop issuing import licenses to other marketers, aiming to be the sole fuel supplier in Nigeria.
“We cannot rely heavily on one refinery to feed the nation, because Dangote is requesting that we should suspend or stop importation of all petroleum products, especially AGO, and direct all marketers to the refinery. That is not good for the nation in terms of energy security, and it’s not good for the market because of monopoly,” Ahmed emphasised.
However, Aliko Dangote, President of the Dangote Group, denied the allegation, questioning how he could be a monopoly when the Nigerian National Petroleum Company Limited is spending $4 billion to renovate government-owned refineries.
President Bola Tinubu has since ordered the NNPC to sell crude oil to Dangote in naira.
