The Management of Dangote Industries Limited has reiterated its stance that international oil companies (IOCs) continue to hinder the supply of crude oil to its 650,000-barrel-per-day refinery. Despite various interventions by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the management claims that challenges persist.
In a statement released on Wednesday, Dangote Group expressed appreciation for the NUPRC’s efforts in addressing their crude supply issues with the IOCs. The Group particularly commended the publication of the Domestic Crude Supply Obligation (DCSO) guidelines, aimed at fostering transparency within the oil industry.
However, Dangote alleged that the IOCs are adamant about selling crude oil to their refinery through foreign agents, leading to inflated local crude prices. According to the Group, these trading arms offer cargoes at premiums of $2 to $4 per barrel above the official price set by the NUPRC.
Furthermore, Dangote Industries accused foreign oil producers of prioritizing sales to Asian countries over local Nigerian refineries.
Mr. DVG Edwin, Vice President of Oil & Gas at Dangote Industries Limited, stated that the diligent implementation of the DCSO guidelines would ensure direct transactions with local crude oil producers, as mandated by the Petroleum Industry Act.
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Edwin emphasized that IOCs operating in Nigeria have repeatedly obstructed the company’s efforts to secure locally-produced crude oil for its refinery. He highlighted that when crude cargoes are made available by the trading arms, they often come with a significant price premium.
Edwin called on the NUPRC to re-evaluate the pricing mechanisms, stressing that the current system does not align with the willing-buyer, willing-seller model envisaged by the Petroleum Industry Act.
In response to a recent statement by NUPRC Chief Executive Gbenga Komolafe, who claimed it was erroneous to assert that IOCs are withholding crude from domestic refiners, Edwin suggested that Komolafe might have been misinformed.
While acknowledging the NUPRC’s support in facilitating crude supply to the Dangote refinery, Edwin insisted that the reality on the ground indicates otherwise.
Edwin urged the NUPRC to reconsider the issue of pricing, reiterating the need for a truly competitive market. For the willing-seller, willing-buyer model to function effectively, there must be sufficient market liquidity, characterized by multiple buyers and sellers actively participating.
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The current situation, where specific crude grades are needed by refineries at particular times, often results in limited market participation, undermining the intended market dynamics.
By addressing these concerns, Edwin believes that the NUPRC can help create a more equitable and transparent market environment, ultimately benefiting both local refiners and the broader Nigerian oil industry.