Africa’s largest oil refinery, the Dangote Refinery, has raised concerns over the Nigerian Upstream Petroleum Regulatory Commission’s (NUPRC) failure to enforce domestic crude supply obligations.
This situation has led to significant challenges in securing the necessary crude oil volumes required for the refinery’s operations, despite increased allocations from the Nigerian National Petroleum Company (NNPC).
In a statement released on Thursday, Anthony Chiejina, Chief Branding and Communications Officer of Dangote Group, clarified the refinery’s position on the ongoing supply issues.
While acknowledging that the NNPC has provided a portion of the crude oil needed, Chiejina emphasized that the supplied volume falls short of the refinery’s total requirements.
The refinery has been unable to secure the remaining portion from both the NNPC and International Oil Companies (IOCs), which has placed considerable strain on its operations.
“Our attention has been drawn to media reports suggesting that the Dangote Refinery has backtracked by acknowledging that NNPC supplied about 60% of the 50 million barrels we lifted,” the statement began.
“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.”
The refinery’s difficulties were further illustrated with the example of its September crude oil requirements.
According to the statement, the refinery needed 15 cargoes for the month but was only allocated six by the NNPC.
Despite appeals to the NUPRC, Dangote was unable to secure the remaining cargoes, forcing the company to turn to international traders.
This move has resulted in additional costs of $3-$4 million per cargo, further complicating the refinery’s operations.
The statement also highlighted the challenges faced by the refinery when dealing with IOCs. When approached for Nigerian-produced crude, these companies either redirected Dangote to their international trading arms or cited existing commitments for their cargoes, effectively blocking the refinery from accessing the necessary feedstock at reasonable prices.
Devakumar Edwin, Vice President of Oil and Gas at Dangote Industries Limited, previously emphasized that strict implementation of the Domestic Crude Supply Obligation guidelines could foster more direct dealings between the refinery and the crude-producing companies in Nigeria.
Edwin criticized the IOCs for consistently frustrating the refinery’s attempts to source crude domestically, leading to a reliance on more expensive international sources.
“We 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 concluded.
