IOCs still causing crude supply crisis – Dangote refinery

The Management of Dangote Refineries has insisted that the international oil companies are still frustrating crude supply to its 650,000-capacity refinery.

The management said this even as it commended the Nigerian Upstream Petroleum Regulatory Commission for its various interventions in the oil company’s crude supply requests from IOCs, and for publishing the Domestic Crude Supply Obligation guidelines to enshrine transparency in the oil industry.

In a statement on Wednesday, the Dangote Group alleged that the IOCs insisted on selling crude oil to its refinery through their foreign agents, saying the local price of crude would continue to increase because the trading arms offer cargoes at $2 to $4 per barrel, above NUPRC official price.

The group also alleged that the foreign oil producers seemed to be prioritising Asian countries in selling the crude they produced in Nigeria.

The Vice President, Oil & Gas, Dangote Industries Limited, Mr DVG 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.

IOCs trading arms

He stated 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 a $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, urging the commission to take a second look at the issue of pricing.

Edwin was reacting to a statement by the Chief Executive of the NUPRC, Gbenga Komolafe, who in an interview on national television said, “It is ‘erroneous’ for one to say that the International Oil Companies are refusing to make crude oil available to domestic refiners, as the Petroleum Industry Act has a stipulation that calls for a willing-buyer, willing-seller relationship.”

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