Dangote refinery insists facility not getting enough crude locally

The Dangote Oil Refinery has insisted that the facility is not getting enough feedstock from producers in the country.

In a statement on Thursday, the Dangote Group Chief Branding and Communications Officer, Anthony Chiejina, said the Nigerian Upstream Regulatory Commission has not been enforcing the domestic crude supply obligations the way it should.

Chiejina was reacting to reports alleging that the refinery has backtracked by acknowledging that the Nigerian National Petroleum Company Limited supplied about 60 per cent of the 50 million barrels it had lifted.

The company was said to have stated this on Wednesday before the Senate committee investigating allegations of 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.

“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 said.

He reiterated that the company often purchases the same Nigerian crude from international traders at an additional $3-$4 premium per barrel, which translates 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,” the statement concluded.

The According recalls that Dangote Group’s management alleged that the IOCs were still frustrating crude supply to the 650,000-capacity refinery.

The group alleged that the IOCs insisted on selling crude oil to its refinery through their foreign agents, saying the local price of crude will continue to increase because the trading arms offer cargoes at $2 to $4 per barrel, above NUPRC’s official price.

The group also alleged that the foreign oil producers seem to be prioritising Asian countries in selling the crude they produce in Nigeria.

The Vice President, Oil amd Gas, Dangote Industries Limited, Mr DVG Edwin, said: “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 frustrated the company’s requests for locally-produced crude as feedstock for its refining process.

He highlighted that when cargoes are offered to the oil company by the trading arms, it is sometimes at a $2 to $4 (per barrel) premium above the official price set by the Nigerian Upstream Petroleum Regulatory Commission.

Edwin was reacting to a statement by the Chief Executive of the NUPRC, Gbenga Komolafe, who, in an interview on national television, said, “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.”

The Chief Executive of Nigerian NMDPRA, Farouk Ahmed, debunked the claim, saying Nigeria could not rely heavily on the Dangote refinery for its fuel supply.

Ahmed said Dangote diesel has a higher sulphur content than the ones imported into the country.

According to him, the refinery had requested the regulator to stop giving import licences to other marketers to be the only 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 that is not good for the market, because of monopoly,” Ahmed stressed.

However, the President of the Dangote Group, Aliko Dangote, denied the allegation, wondering how he could be a monopoly when the Nigerian National Petroleum Company Limited is renovating government-owned refineries with $4bn.

President Bola Tinubu has since ordered the NNPC to sell crude oil to Dangote in naira.