Dangote, local refineries stop fuel imports

Owners of local refineries in Nigeria, including the Dangote Petroleum Refinery, say they can help the country stop importing refined petroleum products within 18 months if the federal government cooperates with their plans.

The refiners, speaking under the auspices of the Crude Oil Refiners Association of Nigeria, said there were other refineries at various stages of completion that would join the 650,000 capacity Dangote Petroleum Refinery.

In an interview, Eche Idoko, Publicity Secretary at CORAN, told The PUNCH that the Dangote refinery and other refineries in the country can meet the country’s fuel needs.

Idoko’s remark comes at a time when the Chief Executive of the Nigerian Midstream and Downstream Regulatory Authority, Farouk Ahmed, has said the country will not stop fuel imports to break the Dangote monopoly and ensure energy security.

The CORAN official said the government could not possibly tackle rising inflation unless it addressed high fuel costs, especially by working with local refineries.

“You cannot tackle inflation if you do not tackle the pump price of petroleum products. You cannot say you have a plan to reduce inflation and you do not involve the key sectors like the refineries; you have to involve us, let us work together.

“And CORAN says that if the Nigerian government works with our programs and plans within 18 months, within 18 months we can completely stop the importation of petroleum products. There are refineries in various stages of completion. Within 18 months we can produce what Nigeria will consume,” he stated.

Idoko said Nigeria has enough crude oil to feed Dangote and other refineries, but noted that crude oil theft poses the biggest challenge to the upstream oil sector.

“We have the crude oil to feed these refineries and more fields are being licensed every day. So there will be crude oil to feed the refineries. Our production numbers are going down because of the crude oil that is being stolen every day.

“If we have local refineries, the theft of crude oil will go down. People steal crude oil through pipelines and most refineries are located close to some of these fields. What this does is that the crude oil producers no longer have to pump their crude oil through the pipelines to the terminal for export.

“The local refineries will simply come from the fields by truck or take a short pipeline or barge from their fields to these places. We lose a lot because unscrupulous elements steal crude oil from the long pipelines,” Idoko said.

The CORAN official said the international oil companies should sell crude oil to local refineries at a price lower than the international price.

He urged the Federal Government to ensure that crude oil is sold in naira and not dollars, which he said would reduce the cost of fuel production and reduce pressure on the local currency.

He indicated that stopping fuel imports would strengthen the value of the naira against the dollar and asked the IOCs to sell fuel directly to local refineries instead of referring it to their commercial agents in Europe.

The NMDPRA boss had earlier warned that Nigeria is not heavily dependent on the Dangote refinery for its fuel supply.

According to him, the refinery had requested the regulator to stop issuing import permits to other traders, in order to become the sole supplier of fuel in Nigeria.

“We cannot rely heavily on one refinery to feed the nation because Dangote is asking us to suspend or stop the importation of all petroleum products especially AGO and direct all marketers to the refinery, that is not good for the nation in terms of energy security. And that is not good for the market, because of the monopoly,” Ahmed stressed.

However, Dangote Group President Aliko Dangote denied the allegation, wondering how he could have a monopoly when the Nigerian National Petroleum Company Limited is renovating government refineries with an investment of $4 billion.

Many Nigerians have called on the federal government to support local refineries and stop fuel imports, hoping that this would bring down the pump price of petrol and diesel.

Dangote, who has been complaining about the alleged refusal of international oil companies to supply crude oil to his refineries, recently said he would start supplying petrol between August 10 and 12.

However, an official of the Dangote Group told our correspondent anonymously that the refinery could export its petrol if the current crude oil crisis persists.

Shareholders on Dangote

Meanwhile, shareholders have condemned the Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority, Farouk Ahmed, for saying the Dangote refinery produced diesel with higher sulphur content than imported diesel.

The group, under the auspices of the Pragmatic Shareholders Association of Nigeria, in a statement signed by its National Coordinator, Mrs Bisi Bakare, expressed dismay over the regulator’s allegations regarding the quality of diesel produced by Dangote.

Bakare commended Dangote for his visionary step in setting up one of the world’s largest refineries. She stressed Dangote’s commitment to national development, highlighting his patriotism and determined nature through substantial investments such as the refinery.

“Dangote has ensured that the majority of its business investments are local, which contributes significantly to economic development through tax payments, extensive job creation and consistent returns to shareholders,” she added.

The group condemned what it described as “unwarranted attempts to remove the refinery from the market” by regulators.

It warned that such actions could deter both local and international investors and undermine government efforts to stabilise fuel prices and ensure its availability.

“We must unite around the Dangote refinery to provide crucial support such as allocation of crude oil, cooperation from international oil companies and collaboration with regulatory agencies,” she noted.

According to Bakare, the refinery could save Nigeria over 30 percent of the foreign exchange it currently spends on offshore refining, which could significantly ease the country’s foreign exchange challenges.

“As shareholders, we remain steadfast in our support of Alhaji Aliko Dangote’s vision to strengthen the country’s economy and create more opportunities for our citizens,” she said.

IOCs summoned

Last week, Dangote Group management stressed that the IOCs are still blocking the delivery of crude oil to the 650,000-capacity refinery.

In a statement, the group alleged that the IOCs insisted on selling crude to its refinery through their foreign agents. According to them, the local price of crude will continue to rise as the trading departments are offering cargoes at $2 to $4 per barrel, which is above the official price of the NUPRC.

The group also alleged that foreign oil producers appear to be prioritizing Asian countries in selling the crude oil they produce in Nigeria.

The Vice President, Oil and Gas, Dangote Industries Limited, Mr. DVG Edwin, said: “If the guidelines of the Domestic Crude Supply Obligation are implemented diligently, it will ensure that we deal directly with the companies that produce crude oil in Nigeria as stipulated in the Petroleum Industry Act.”

Edwin stressed that IOCs operating in Nigeria have consistently thwarted the company’s requests for locally produced crude oil as feedstock for the refining process.

He stressed that when the trading departments offer cargoes to the oil company, it is sometimes at a premium of $2 to $4 (per barrel) above the official price set by the Nigerian Upstream Petroleum Regulatory Commission.

“As an example, we paid $96.23 per barrel for a cargo of Bonga crude in April (excluding transportation). The price consisted of a dated Brent price of $90.15 plus an NNPC premium of $5.08 plus a trader’s premium of $1. In the same month, we were able to buy WTI at a dated Brent price of $90.15 + $0.93 trader’s premium including transportation. When the Nigerian National Petroleum Company Limited subsequently reduced its premium based on market feedback that it was too high, some traders started asking us for a premium of up to $4 million above the NSP for a cargo of Bonny Light.

“Data from platforms like Platts and Argus shows that the price we are being offered is much higher than the market prices followed by these platforms. We recently had to escalate this to NUPRC,” Edwin said, urging the committee to revisit the pricing issue.

Edwin was responding to a statement by NUPRC Chief Executive Gbenga Komolafe who said in an interview on national television: “It is ‘wrong’ to say that the international oil companies are refusing to make crude oil available to domestic refineries as the Petroleum Industry Act contains a provision that calls for a relationship between willing buyers and willing sellers.”

Edwin noted that the commission has been very supportive of the Dangote refinery and has intervened several times to secure the supply of crude oil. He however stressed that the NUPRC boss may have been misquoted by some. That is why he stated that the IOC has not refused to sell to us.