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IOCs continue to cause crude supply issues, Dangote refinery complains.

By: Adisa Deborah

Dangote Industries Limited’s management has condemned the Nigerian Upstream Petroleum Regulatory Commission for interfering with the company’s crude supply requests from international oil companies (IOCs) and issuing the Domestic Crude Supply Obligation guidelines.

The group argues that IOCs insisted on selling crude oil through foreign middlemen, leading local prices to rise. The company intends to follow the Domestic Crude Supply Obligation criteria by dealing directly with Nigerian crude oil producers.

 

Crude oil prices supplied by trading arms to the oil business may be $2 to $4 per barrel higher than the official price established by Nigerian National Petroleum Business Limited (NUPRC). For example, in April, the business paid $96.23 a barrel for a Bonga crude-grade cargo, which comprised a dated Brent price of $90.15, a $5.08 NNPC premium, and a $1 trader premium. The NUPRC’s CEO, Gbenga Komolafe, justified the situation, claiming that multinational oil corporations are not refusing to supply crude oil to indigenous refiners.

 

Edwin, the head of Indonesia’s National Oil Company (NUPRC), has been accused of misquoting the Dangote refinery’s backing. He added that the refinery has only acquired oil directly from Sapetro, a local producer, while other producers have referred them to their international trading arms. Edwin highlighted a circumstance in which international trading arms submitted Nigerian cargo into a Pertamina tender, forcing the refinery to wait for the tender to be completed. He asked the NUPRC to review pricing and emphasized the need for market liquidity in maintaining a willing-seller, willing-buyer base in oil supply.

 

Alhaji Aliko Dangote, President of the Dangote Group, said that the refinery will begin producing fuel in August 2024, having resolved crude oil supply concerns with the assistance of the Nigeria National Petroleum Company Limited and the Federal Government. The Nigerian Upstream Petroleum Regulatory Commission has ordered oil refiners to furnish monthly pricing bids for crude supplies. The Oil Oil Refiners Association of Nigeria accuses IOCs of selling oil to CORAN members via European trade agents.

 

CORAN, Nigeria’s oil business, is optimistic that the Federal Government’s recent action will help end the habit of oil corporations engaging in illicit operations. Eche Idoko, CORAN Publicity Secretary, indicated that oil corporations are attempting to avoid the Domestic Crude Service Obligation (DCSO) rule, which requires crude producers to serve the Nigerian market. The IOCs want agreements formed between refineries and their trading agency, which is against the Petroleum Industry Act. The IOCs also demand payment from A-rated banks, which are unavailable in Nigeria, making it harder for them to buy on a domestic trade basis.

 

Gbenga Komolafe, CEO of the Nigerian Petroleum Confederations (NUPRC), has urged for a coordinated effort to prevent the Dangote Petroleum Refinery from importing oil due to an unfavorable Nigerian market. The federal government is encouraged to ensure that the refinery has access to cheap crude to avoid imports. CORAN attempts to reduce fuel scarcity and inflation. However, attempts to contact the International Organization of Petroleum Confederations (IOCs) have proven ineffective. Komolafe asked oil producers to handle crude supply transactions, amid fears that their pricing strategy could overburden domestic refineries.