A Dangote refinery executive accused oil majors of blocking access to local crude by overpricing or claiming unavailability, forcing the company to depend on costly imports.
The $20 billion refinery, billed to be the largest in Africa and Europe at full throttle, started production in January but has struggled to find enough crude to meet its 650,000 barrels per day capacity. It is importing around 10 crude oil cargoes monthly, oil traders said.
In May, it tendered for two million barrels of West Texas Intermediate (WTI) Midland crude every month for a year starting in July, Reuters news agency reports. “Either the oil majors are deliberately asking for ridiculous premiums or they simply state that crude is not available,” Devakumar Edwin, an executive at Dangote oil refinery, said in a statement.
He said the refinery paid $6 above the market price, forcing it to cut output and depend on imported crude from countries such as the United States. This, he said, raised its production cost. Oil producers in Nigeria, through their trade group, the Oil Producers Trade Section (OPTS), did not immediately respond to the accusation.
The Dangote oil refinery was supposed to receive 325,000 bpd from oil companies in the domestic crude supply obligation guidelines issued by one of the country’s oil regulators, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), last December.
However, oil producers have been unable to meet the quota. Nigeria’s 2021 oil industry law created two oil regulators: the NUPRC for the exploration segment and the Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to regulate gas and downstream segments.
Edwin also accused the NMDPRA of indiscriminately granting import licenses to fuel traders who import dirty fuels from Russia while its refinery adjusts to the sub-regional fuel standard. Edwin stated that Nigeria’s decision to permit fuel traders to import dirtier products indiscriminately has pushed Dangote refineries to seek foreign markets. He noted that the refinery has exported 3.5 billion liters of refined products, accounting for 90% of its production.
