Africa’s largest oil refinery, Dangote Refinery, has reiterated its challenges in securing adequate crude oil supply for its operations, despite claims of increased allocation from the Nigerian National Petroleum Company (NNPC).
In a statement on Thursday, Anthony Chiejina, the Dangote Group’s Chief Branding and Communications Officer, said the refinery’s primary issue lies with the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) for its alleged failure to enforce the domestic crude supply obligation.
According to Dangote, while NNPC has supplied a portion of the required crude, the volume falls significantly short of the refinery’s needs. The company claimed to have been unable to secure the remaining portion from both NNPC and International Oil Companies (IOCs).
The statement read: “Our attention has been drawn to media reports alleging that the Dangote Refinery has backtracked by acknowledging that NNPC supplied about 60% of the 50 million barrels we lifted.
“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 IOCs.
“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.”
As a result, Dangote has been compelled to purchase Nigerian crude from international traders at inflated prices, incurring additional costs of $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 Petroleum Industry Act (PIA),” the statement read.
Devakumar Edwin, the Vice President of oil and gas at Dangote Industries Limited, had earlier said that if the Domestic Crude Supply Obligation guidelines are diligently implemented, it will foster deals directly with the companies producing the crude oil in Nigeria as stipulated by the Petroleum Industry Act.
Edwin maintained that IOCs operating in Nigeria have consistently frustrated the company’s requests for locally-produced crude as feedstock for its refining process.
According to him, 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 Commission.
