The Management of Dangote Industries Limited has accused International Oil Companies (IOCs) of obstructing its refinery operations.
In a statement released on Wednesday, the company claimed that IOCs insist on selling crude oil to its refinery through foreign agents.
Dangote Industries argued that this practice inflates the local price of crude, with trading arms offering cargoes at a premium of $2 to $4 per barrel above the official price set by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC). Vice President of Oil & Gas at Dangote Industries, Mr. DVG Edwin, emphasized this point by sharing specific instances of inflated pricing for crude cargoes.
Despite these challenges, Edwin commended the NUPRC for its interventions and the publication of the Domestic Crude Supply Obligation (DCSO) guidelines aimed at ensuring transparency in the oil industry. He expressed hope that diligent implementation of these guidelines would allow direct dealings with companies producing crude oil in Nigeria.
Edwin accused IOCs of prioritizing sales to Asian countries, thereby complicating local procurement efforts. He cited an example where Dangote Industries paid $96.23 per barrel for a cargo of Bonga crude in April, which included various premiums above the Brent price. Comparatively, the company managed to purchase WTI crude at a much lower premium during the same period.
Edwin’s response followed comments by NUPRC Chief Executive, Engr. Gbenga Komolafe, who had suggested that IOCs were not refusing to supply crude to domestic refiners. Edwin clarified that Dangote Industries has faced significant difficulties in securing crude directly from local producers, often being redirected to international trading arms that add non-value-adding margins.
Edwin urged the NUPRC to review the pricing issues, noting that the current system allows for price gouging in an illiquid market. He suggested that a more transparent pricing formula, similar to that used in the domestic gas supply obligation, would prevent unjustifiable markups and ensure fairer pricing for domestic crude supply.
In conclusion, Dangote Industries called for continued support from the NUPRC and highlighted the need for wisdom and transparency in addressing the gaps within the current domestic crude supply framework.