In recent developments involving Dangote Refinery and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the refinery has strongly urged NUPRC to enforce the domestic crude supply obligation as mandated by the Petroleum Industry Act (PIA). This call comes in response to ongoing challenges the refinery faces in securing its full crude oil requirement from domestic sources.
Disputes and Allegations
Dangote Refinery has been embroiled in disputes with both government officials and international oil companies over the supply of crude oil to its 650,000 barrels per day facility. NUPRC has accused the refinery of producing substandard products and pursuing a monopolistic market. Conversely, Dangote Refinery has alleged that government officials are obstructing its operations and pointed out that a significant portion of its crude supply is imported rather than sourced locally.
Challenges in Securing Local Crude
In a statement released by the Group Chief, Branding and Communications Officer at Dangote Petroleum Refinery, Anthony Chiejina, Dangote Refinery outlined the difficulties it faces in securing adequate crude oil supplies domestically. The refinery also denied recent media reports suggesting it had backtracked on its statements regarding crude supply. It clarified that it had not accused the Nigerian National Petroleum Company Limited (NNPCL) of failing to provide crude. Instead, its primary concern is the enforcement of the domestic crude supply obligation by NUPRC to ensure the refinery receives its full crude oil requirements from NNPC.
Concerns Over NUPRC Enforcement
The refinery expressed frustration with NUPRC’s perceived reluctance to enforce the domestic crude supply obligation. For September, Dangote Petroleum Refinery required 15 cargoes of crude oil but received only six from NNPC. Despite appeals to NUPRC, the remaining cargoes have not been secured. When approaching international oil companies operating in Nigeria, the refinery was either redirected to their international trading arms or informed that their cargoes were committed elsewhere.
As a result, Dangote Petroleum Refinery has had to purchase Nigerian crude from international traders at an additional premium of $3-$4 per barrel, resulting in an extra $3-$4 million per cargo.
Public and Government Response
The ongoing conflict between the refinery and the government has attracted significant attention from Nigerians, many of whom support the refinery’s cause. As the only operational refinery in Nigeria, Dangote Refinery’s struggles have highlighted the lack of support from those in power. The dispute has fueled calls for the enforcement of the PIA regarding crude oil obligations to local refineries. If successful, this enforcement could grant Dangote a legal right to a percentage of crude oil from producers, alleviating the refinery’s current challenges and potentially boosting petroleum production in Nigeria.
