Tag: Dangote refinery

The House of Representatives yesterday resolved to investigate allegations that the Nigeria Upstream Petroleum Regulatory Commission (NUPRC) and International Oil Companies (IOCs) operating in the country have colluded to deny Dangote Refinery crude oil supply thereby frustrating it’s operation.

The House also resolved to investigate the claim by the Chairman of Dangote Refinery, Aliko Dangote alleging that Nigeria, through the NNPCL own only 7.2 per cent shares of the refinery instead of the 20 percent known to Nigerians.

This followed the adoption of a motion of urgent public importance sponsored by Minority Leader, Kingsley Chinda, on alleged conspiracy by International Oil Companies to frustrate the operation and survival of Dangote refinery and the actual percentage of holding of the federal government in the refinery.

He said: “here is an urgent need to look into these allegations by Dangote Refinery and end/break all forms of dominance and monopoly of the petroleum sector by the IOCs and confirm the quantum of Federal government interest in the refinery.

“Unless urgent steps are taken by the Federal government, as well as investigate this matter and call the IOCs to order, Dangote Refinery and its operations would be prematurely pushed/forced out of business and this would not be good for us as a people.” He also expressed concerned that NNPC LTD is said to be unable to subscribe for the 20% shares.

He said even though Nigeria is a major oil producing and exporting country, she has for several years continued to import refined petroleum products from other countries, to the detriment of the economic well-being of the country.

He said Dangote Refinery, with a capacity of 650,000 barrels per day (bpd) is said to be Africa’s largest refinery, and the World’s seven per cent largest by capacity, and its construction was meant to alleviate the petroleum products needs and accompanying pains faced by Nigerians.

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He recalled that recently, the management of Dangote Refinery accused International oil companies (IOCs) operating in the country of conspiracy, in an attempt to frustrate the smooth operations of the refinery.

He said further that the alleged conspiracy against Dangote refinery relates to efforts by the IOCs to deliberately frustrate the refinery’s to buy local crude oil by manipulating and jerking up the premium price above the market price, thus forcing the refinery to reduce output, ag well as import crude oil at very exorbitant cost from other countries, Such as the United States, and thereby increasing the cost of Production locally and inereased product price.

He revealed that information from the management of Dangote Refinery indicate that whilst the NUPRC was trying its best to allocate crude to Dangote Refinery, the 1OCs were deliberately frustrating Dangote Refinery’s effort to buy the local crude.

He said: “the management of Dangote Refinery alleged that the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) was still granting import licenses, indiscriminately, to marketers to import sub-standard refined petroleum products into the country.

“Whilst the IOCs are keen on exporting raw materials to their home countries and thus create wealth and employment for their countries, thereby adding to their GDP, Nigeria continues to be a dumping ground for the refined products, thus making us dependent on imported petroleum products”.

He expressed concerned about the IOC’s strategy/plan which he said is capable of making Nigeria face higher unemployment rate and poverty.

He said there was the urgent need for the Federal government, relevant MDAs, including the NUPRC and the NMDPRA, key stakeholders and well-meaning Nigerians to support Dangote Refinery to succeed.

Chinda also expressed concern that whilst the Federal government of Nigeria subscribed 20 per cent shares in Dangote Refinery, the Chairman (Aliko Dangote) claimed that Nigeria was unable to redeem its obligation and now owns 7.2 per cent through NNPC Ltd.

The Young Professionals’ Workshop, under the sub-theme “Market Trends and Economic Outlook in the Downstream and Midstream Sector: Roles and Opportunities for Young Professionals,” will offer emerging professionals insights into market dynamics and potential career opportunities. This session the Chairman said aims to equip young professionals with the knowledge and skills needed to thrive in the evolving petroleum landscape.

Tahir informed the Women Leadership Programme will focus on “Equality by Design: Formulating Leadership Strategies to Ensure Gender Inclusivity in the Petroleum Value Chain.” This Programme will address strategies for promoting gender equality and inclusivity within the industry. It will feature discussions and presentations from leading female professionals, providing inspiration and actionable strategies for fostering a more inclusive work environment.

According to him, the exhibition will showcase the latest technologies, products, and services from leading companies in the petroleum industry adding it will also provide a unique opportunity for attendees to engage with cutting-edge solutions and innovations.

“This year’s conference will not only address current market trends and economic outlooks but also emphasize the importance of inclusivity and leadership development within our industry,” Tahir added.

Determined to ensure smooth operations in its facility, the Dangote Petroleum Refinery and Petrochemicals, has said it has issued a tender for an additional 11 million barrels of US crude oil over the next six months.

This move is not unconnected with the refinery’s inability to source crude oil for its operations locally, even as local crude oil producers have not been able to meet the facility’s feedstock requirements.

Although the refinery which has already received nine million barrels of West Texas Intermediate (WTI) crude from the US since the beginning of 2024 to ward off operational disruption that could have plagued its operations, sourcing feedstock locally has remained a huge challenge for the 650,000 barrels per day (bpd) capacity refinery.

The latest tender, which closes on July 21, aims to procure two million barrels per month of WTI Midland crude for Dangote Refinery- the world’s largest single-train facility located in Ibeju Lekki, Lagos, will ensure that the facility remains operational over the next six months starting in August.

According to a report by Bloomberg, Dangote Refinery purchased five million barrels of WTI Midland crude for delivery in the upcoming months of August and September. Additionally, the company initiated a tender process to acquire an additional six million barrels of American crude for September.

This reliance on crude oil importation, especially from the United States by Dangote  Refinery is seen as a sore point on the country’s challenges in meeting its refining needs. Recently, the Vice President of Oil and Gas, Dangote Industries Limited, Devakumar Edwin, apparently frustrated by the development, had accused International Oil Companies (IOCs) operating in the country of plans to frustrate the survival of the new Dangote Petroleum Refinery.

He insisted that the IOCs were deliberately and wilfully frustrating the refinery’s efforts to buy local crude by hiking the cost above the market price, thereby forcing the refinery to import crude from countries as far as the United States, with its attendant high costs.

“Recall that the NUPRC recently met with crude oil producers as well as refineries’ owners in Nigeria, in a bid to ensure full adherence to Domestic Crude Oil Supply Obligations as enunciated under section 109(2) of the Petroleum Industry Act. It seems that the IOCs’ objective is to ensure that our petroleum refinery fails. It is either they are deliberately asking for a ridiculous/humongous premium or they simply state that crude is not available.

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 “At some point, we paid $6 over and above the market price. This has forced us to reduce our output as well as import crude from countries as far as the US, increasing our cost of production. It appears that the objective of the IOCs is to ensure that Nigeria remains a country which exports crude oil and imports refined petroleum products.

 “They (IOCs) are keen on exporting the raw materials to their home countries, creating employment and wealth for their countries, adding to their Gross Domestic Product, and dumping the expensive refined products into Nigeria – thus making us to be dependent on imported products. It is the same strategy the multinationals have been adopting in every commodity, making Nigeria and Sub-Saharan Africa to be facing unemployment and poverty, while they create wealth for themselves at our expense,” Edwin had stated.

This allegation was further accentuated by the President, Dangote Industries Limited, Aliko Dangote while speaking at the Afreximbank annual meetings (AAN) and AfriCaribbean Trade and Investment Forum in Nassau, The Bahamas, recently. At the event, Dangote revealed that local and foreign mafia tried several times to sabotage his $19 billion refinery from coming to reality.

In clear terms, he made it know that his refinery was been deprived of crude oil supply by the IOCs. “In a system where for 35 years people are used to counting good money, and all of a sudden they see that the days of counting that money have come to an end, you don’t expect them to pray for you. Of course, you expect them to fight back. So, you expect them to fight through non-supply of crude, non-purchase of the product. But I think it’s all temporary. We’ll get there,” he hoped.

This hope of “getting there” may just be around the corner. Last Monday, at a virtual meeting held between the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), crude oil producers in Nigeria and all the international oil companies (IOCs), agreed to concede to a framework that would be mutually beneficial aimed at ensuring that local refineries are not strangulated due to off-the-curve prices. The focus of the meeting held at the instance of the Commission’s Chief Executive (CCE), Gbenga Komolafe, an engineer, was on the status review of the Framework for Seamless Operationalisation of Domestic Crude Oil Supply Obligation Template.

The agreement by all involved to work towards a sustainable supply of crude oil to local refineries under a market-determined pricing system will also ensure that while the operators do business optimally, the refineries are not starved of feedstock.

This is why industry sources and experts maintained that the deliberations at the meeting will aid domestic availability of crude stock to the Dangote Refinery.

If the strategic positioning of the Dangote Refinery crucial to Nigeria’s goal of becoming a net exporter of petroleum products, for now, it has become necessary to import crude to sustain operations amidst insufficient domestic supply.

Dangote, at the Africa CEO Forum 2024, reiterated that the refinery will need to continue importing crude as production scales up and alternative supply contracts are sought.

 “It also makes economic sense for us to tender for crude. If we could source 100 percent Nigerian crude, then fine, but we can’t wait,” said Dangote.

Commenting on the challenge with sourcing crude locally, Dangote added, “there is a bit of a problem for us to source the entire volume of crude that we’re looking for domestically because we need different types and mixes. Unless crude production improves – which we pray and hope for – we need to go elsewhere.”

Reports and statistics from the industry revealed that the Dangote Refinery took in more than 41 million barrels of feedstock in the first half of the year as it completed test runs and gradually increased processing rates, tanker-tracking data show. Of that, about a quarter has been American supply. The Nigerian National Petroleum Company (NNPC) Limited, has struggled to meet its 300,000 barrels per day obligation to the refinery due to operational constraints.

International financial analytics corporation, S&P Global, recently described the Dangote Petroleum Refinery and Petrochemicals company as capable of resolving Nigeria’s foreign exchange (forex) issue and its huge pressure on the local currency, while also catalysing the country’s economic development.

S&P Global, with its headquarters in Manhattan, New York City, also disclosed this during an onsite visit to the refinery as part of its sovereign credit ratings assessment of Nigeria. The team from the international rating agency were accompanied by officials from the Ministry of Finance.

S&P noted that the refinery would bolster Nigeria’s oil sector and, more importantly, also have a positive impact on its growing economy.

Currently operating at 350,000 barrels per day capacity, Vice President of Oil and Gas at Dangote Industries Limited (DIL), Devakumar Edwin, recently disclosed that the refinery would scale up to at least 500,000 barrels per day capacity by July/August, commencing the refining of petrol and ultra-low sulphur diesel.

He noted that the refinery, designed to process a wide range of crudes including various African and Middle Eastern crudes, as well as US Light Oil, conforms to Euro V specifications. In addition, it is designed to comply with US EPA, European Union (EU) emission norms, the Department of Petroleum Resources (DPR) emission/effluent norms, and the African Refiners and Distribution Association (ARDA) standards.

While noting that most refineries were built by foreign companies, he said it is a thing of pride that a Nigerian company designed and built the world’s largest single-train refinery complex while acting directly as its own Engineering, Procurement, and Construction (EPC) contractor. The refinery which also incorporates a self-sufficient marine facility capable of handling the world’s largest vessels, can meet 100 per cent of Nigeria’s requirement of all liquid products including petrol, Diesel, Kerosene and Aviation Jet (A1) and have surplus of each of these products for export.

Dangote Oil Refinery is significantly increasing its diesel exports to West Africa, thereby capturing market share from European refiners, according to traders and shipping data. The operations of the $20 billion refinery, located in the Lekki area of Lagos, according to a report by Reuters, has spiked competition in the sub regional market, leading to the EU, UK, and Russian diesel exports to West Africa hitting multi-year lows.

In May, the refinery’s gasoil exports nearly doubled from April, reaching almost 100,000 barrels per day (bpd), as per data from analytics firm, Kpler. Most of these exports were directed to other West African countries, although one cargo was shipped to Spain.

However, preliminary data for June indicated a sharp decline in gasoil volumes. Despite this, overall oil product exports, including fuel oil, naphtha, and jet fuel, remained relatively high at 225,000 bpd.

A source noted that the refinery has “changed the balances in West Africa,” impacting European markets as a result. Data from Kpler revealed that EU and UK gasoil exports to West Africa fell to a four-year low of 29,000 bpd in May, while Russian exports to the region dropped to an eight-month low of 87,000 bpd, all due to the Dangote Refinery operations.

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Yet, the management of the firm is upbeat about its increased operations in the weeks ahead. This comes on the heels of the restart of more units within the facility to produce higher volume. “We have commissioned more equipment, and it will be kick started within two weeks,” said the Vice President, Dangote Refinery, Devakumar Edwin.

In similar vein, the Group Chief Branding and Communications Officer, Dangote Industries Limited, Anthony Chiejina, confirmed to The Nation, yesterday, that the refinery is set for greater output that will change the narrative in the country, sub region and beyond in no time.

“We assure the market of the best quality of petroleum products that can be found anywhere in the world. We cannot compromise on quality; Nigerian, African and global markets can be rest assured of premium quality from our refinery,” Chiejina said.