Dangote Refinery CEO Explains Why Fuel Prices May Remain High Despite Full Production
- Dangote Refinery CEO David Bird says petrol prices may remain high due to volatility in global oil markets
- The refinery says it buys crude oil at international benchmark prices, including crude purchased from Nigeria
- Nigerian crude accounts for about 30–35 per cent of the refinery’s supply, with the rest sourced internationally
Oluwatobi Odeyinka is a business editor at Legit.ng, covering energy, the money market, technology and macroeconomic trends in Nigeria.
The managing director and chief executive officer of Dangote Petroleum Refinery, David Bird, has said petrol prices may not decline even as the refinery operates at full capacity, citing volatility in global oil markets and rising supply chain costs.
Source: UGC
Bird made the remarks during a media chat on Monday, explaining that the refinery operates within the international commodities market, which directly influences the cost of crude oil and refined products.
Dangote purchases crude oil at global price
According to him, the refinery purchases crude oil at global benchmark prices, including crude sourced locally under the crude-for-naira programme.
“We are fully exposed to the international commodity market. That needs to be widely understood,” Bird said.
He explained that crude supplied by the Nigerian government is still priced according to international benchmarks, while additional expenses, such as global freight and insurance, are incurred to transport the crude from export terminals to the refinery.
30% of Dangote refinery feedstock from Nigeria
Bird added that Nigerian crude accounts for about 30 to 35% of the refinery’s feedstock, while the remaining volumes are sourced from the global market and paid for in US dollars.
According to him, the involvement of multiple traders in the supply chain often adds further costs before the crude eventually reaches the refinery.
The refinery, he said, has processed several types of crude oil, including West Texas Intermediate, as well as crude grades sourced from South America, Central America and West Africa.
Dangote refinery to reduce operational cost
Bird acknowledged that rising fuel prices are affecting consumers, noting that the company is working to reduce operational costs where possible.
“I fully acknowledge the pain that is being suffered. We are seeing that. We are doing what we can to ensure that we minimise costs throughout our supply chain,” he said.
He also highlighted the scale of volatility in the global oil market, explaining that the price of Brent crude had climbed from the mid-$60 range about a week earlier to around $118 per barrel.
At the same time, tanker freight costs increased sharply from about $800,000 to roughly $3.5 million per shipment.
Talking points shared by Dangote Group on its official account on X noted that the refinery’s exposure to global markets includes crude prices, freight charges, insurance and financing costs.
The statement added that countries that rely heavily on imported petroleum products are among the most affected by the ongoing disruptions in global oil markets.
Source: Getty Images
Nigeria’s fuel supply stability improved
However, the company noted that domestic refining has improved Nigeria’s fuel supply stability, helping the country avoid shortages and long queues during periods of international supply disruptions.
Bird also said the refinery does not receive discounted crude under the crude-for-naira arrangement, explaining that Nigerian crude is still purchased at international benchmark prices
The refinery is currently operating at its full nameplate capacity of about 650,000 barrels per day, with the potential to increase output to roughly 700,000 barrels per day.
Bird said the facility would continue working to meet Nigeria’s fuel demand despite ongoing global market disruptions.
Dangote raises petrol, diesel prices again
Legit.ng earlier reported that the Dangote Petroleum Refinery increased the ex-depot price of Premium Motor Spirit (PMS), commonly known as petrol, marking the fourth adjustment in its fuel pricing structure.
The refinery has raised the gantry price of petrol from N995 to N1,175 per litre, while Automotive Gas Oil (AGO), widely known as diesel, has also been increased to N1,620 per litre.
Industry sources said the refinery management has communicated the updated price template to fuel marketers, reflecting the fourth revision since March 2.
Source: Legit.ng
