Dangote Accuses International Oil Companies in Nigeria of not Supplying Crude to Refinery
- Dangote Refinery says international oil companies prefer selling crude to traders rather than local refineries
- The refinery has resorted to importing crude from the US and other African countries to meet demand
- Experts say global market forces and existing agreements limit crude availability for domestic refiners
Oluwatobi Odeyinka is a business editor at Legit.ng, covering energy, the money market, technology and macroeconomic trends in Nigeria.
Dangote Refinery has expressed concern over the reluctance of international oil companies (IOCs) operating in Nigeria to sell crude oil directly to the facility, warning that the situation is forcing it to rely on more expensive imports.
President of Dangote Industries Limited, Aliko Dangote, made this known while hosting the Deputy Secretary-General of the United Nations, Amina Mohammed, at the company’s industrial complex in Ibeju-Lekki, Lagos.
Source: Getty Images
Refinery depends on imports despite local efforts
As reported by Daily Trust, Dangote said the refinery has continued to source crude oil from the United States and other African producers to bridge supply gaps, despite improvements under the naira-for-crude initiative.
He commended the Nigerian National Petroleum Company Limited (NNPCL) for increasing crude deliveries in March, noting that the refinery received 10 cargoes, of which six were paid for in Naira and four in Dollars.
Export of fuel to African markets
The refinery boss added that the facility has exported about 17 cargoes of petrol to several African countries to support fuel supply across the continent.
He said the refinery, with a capacity of 650,000 barrels per day, is positioned to stabilise supply in West, Central, and East Africa.
“What I can do is assure Nigerians and most of West Africa, Central Africa, and East Africa, we have the capacity to supply them,” Dangote stated.
Dangote noted that the refinery is seeking greater access to domestically priced crude under local currency arrangements to help reduce fuel costs and strengthen energy and food security.
Some stakeholders have suggested a special arrangement that would allow the refinery to access crude at controlled prices to lower the cost of refined products locally.
Economists weigh in on pricing model
An economist, Bismark Rewane, recently proposed a refinery-based subsidy model that would see the government supply crude to local refiners at controlled rates while ensuring lower fuel prices for consumers.
“Nigeria will actually sell oil to the refiners at a particular price and insist that the refiners bring down their price and pay the difference,” he said.
Why IOCs may not prioritise local refineries
Another industry analyst, Marcel Okeke, explained that IOCs in Nigeria operate as subsidiaries of global firms and are influenced by international market dynamics.
He noted that existing production-sharing arrangements and forward sales of crude by the government limit the volume available for domestic refining.
According to him, the global nature of the oil market means companies tend to sell where they can obtain the best value, making it difficult to mandate local supply.
Dangote also said the company has increased fertiliser exports to African countries to support agricultural productivity and ease supply constraints.
“The challenges are many… in the last couple of days we’ve been loading to mostly African countries, which we were not doing before,” he said.
Source: UGC
Dangote Refinery threatens full export
Legit.ng earlier reported that the Dangote Refinery has threatened to fully supply the international market and deny Nigerians fuel if the Nigerian authorities continue to grant import licences to importers.
Sources within the mega refinery disclosed that management is considering exporting all petroleum products in response to the continued issuance of petrol import licences, despite official claims to the contrary.
Experts argued that reduced local supply may lead to fuel shortages, long queues at filling stations, and renewed upward pressure on pump prices. Such an outcome would reverse recent stability in the downstream sector.
Source: Legit.ng
