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The Dangote Petroleum Refinery has received four shipments of crude oil from the Nigerian National Petroleum Company Limited under the naira-for-crude sale agreement, according to officials of the refinery and the Federal Government.
The refinery is awaiting more crude oil deliveries from NNPCL, and it is now set to begin the direct sale of refined Premium Motor Spirit to domestic dealers..
The President of the Dangote Group, Alhaji Aliko Dangote, had cried out, saying some international oil companies were planning to sabotage the investment by refusing to supply crude.
The Dangote Group had alleged that the IOCs insisted on selling crude oil to its refinery through their foreign agents.
It said the local price of crude would continue to increase because the trading arms offered cargoes at $2 to $4 per barrel, above the official price.
The group also alleged that the foreign oil producers seem to be prioritising Asian countries in selling the crude they produce in Nigeria.
Despite the intervention of the Nigerian Upstream Petroleum Regulatory Commission in July, the group insisted that the IOCs were still frustrating the refinery.
The Vice President, Oil & Gas, Dangote Industries Limited, Mr Devakumar Edwin, said, “If the Domestic Crude Supply Obligation guidelines are diligently implemented, this will ensure that we deal directly with the companies producing the crude oil in Nigeria as stipulated by the Petroleum Industry Act.”
Edwin insisted that IOCs operating in Nigeria had consistently frustrated the company’s requests for locally-produced crude as feedstock for its refining process.
He highlighted that when cargoes were offered to the oil company by the trading arms, it was sometimes at a $2 to $4 (per barrel) premium above the official price set by the NUPRC.
“As an example, we paid $96.23 per barrel for a cargo of Bonga crude grade in April (excluding transport). The price consisted of a $90.15 dated Brent price plus $5.08 NNPC premium plus a $1 trader premium. In the same month, we were able to buy WTI at a dated Brent price of $90.15 + $0.93 trader premium including transport. When the Nigerian National Petroleum Company Limited subsequently lowered its premium based on market feedback that it was too high, some traders then started asking us for a premium of up to $4m over and above the NSP for a cargo of Bonny Light.
“Data on platforms like Platts and Argus shows that the price offered to us is way higher than the market prices tracked by these platforms. We recently had to escalate this to NUPRC,” Edwin said in July, urging the commission to take a second look at the issue of pricing.
The group also alleged that the foreign oil producers seem to be prioritising Asian countries in selling the crude they produce in Nigeria.
Despite the intervention of the Nigerian Upstream Petroleum Regulatory Commission in July, the group insisted that the IOCs were still frustrating the refinery.
The Vice President, Oil & Gas, Dangote Industries Limited, Mr Devakumar Edwin, said, “If the Domestic Crude Supply Obligation guidelines are diligently implemented, this will ensure that we deal directly with the companies producing the crude oil in Nigeria as stipulated by the Petroleum Industry Act.”
Edwin insisted that IOCs operating in Nigeria had consistently frustrated the company’s requests for locally-produced crude as feedstock for its refining process.
He highlighted that when cargoes were offered to the oil company by the trading arms, it was sometimes at a $2 to $4 (per barrel) premium above the official price set by the NUPRC.
“As an example, we paid $96.23 per barrel for a cargo of Bonga crude grade in April (excluding transport). The price consisted of a $90.15 dated Brent price plus $5.08 NNPC premium plus a $1 trader premium. In the same month, we were able to buy WTI at a dated Brent price of $90.15 + $0.93 trader premium including transport. When the Nigerian National Petroleum Company Limited subsequently lowered its premium based on market feedback that it was too high, some traders then started asking us for a premium of up to $4m over and above the NSP for a cargo of Bonny Light.
“Data on platforms like Platts and Argus shows that the price offered to us is way higher than the market prices tracked by these platforms. We recently had to escalate this to NUPRC,” Edwin said in July, urging the commission to take a second look at the issue of pricing.
President Bola Tinubu proposed selling crude oil to local refineries in naira during a Federal Executive Council meeting on July 29.
The Federal Executive Council adopted this proposal, approving the sale of 450,000 barrels meant for domestic consumption to Nigerian refineries, using the Dangote refinery as a pilot.
A presidential aide stated that the exchange rate would be fixed for the duration of this transaction, though it could not be immediately confirmed if the government had done so.
Operators have suggested that the current price of petrol would decrease if the government sells crude to local refineries, pegging the exchange rate at N1,000 to a dollar instead of using N1,600.
The implementation committee headed by Edun said the sale of crude oil in naira commenced on October 1 as scheduled.
On September 13, 2024, the committee announced that the Federal Executive Council approved the sale of crude oil to local refineries in naira and the corresponding purchase of petroleum products in naira. From October 1, NNPC will commence the supply of about 385,000 barrels per day of crude oil to the Dangote refinery to be paid for in naira.
This implies that NNPC is to supply about 11.5 million barrels of crude oil to the Dangote refinery monthly, and based on the deal, the plant will release equivalent volumes of refined diesel and petrol to the domestic market also in naira.
Marketers react, stating that the supply of crude to Dangote refinery would address complaints of shortfall in PMS supply to the NNPC and other marketers, and that demand and supply would determine the price of PMS as time goes by.
