The Vice President of Oil and Gas, Dangote Industries Limited (DIL), Devakumar Edwin, stated on Wednesday that International Oil Companies (IOCs) operating in Nigeria have continually frustrated the company’s efforts to obtain locally produced crude for its refining operations.
In a statement released by the management of Dangote Industries Limited, Edwin responded to comments made by Gbenga Komolafe, the Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
Komolafe had stated in an interview with ARISE News TV that it was “erroneous” to claim that IOCs were refusing to supply crude oil to domestic refiners, citing the Petroleum Industry Act (PIA) which promotes a willing buyer, willing seller relationship.
Last month, Edwin accused IOCs in Nigeria of obstructing the survival of Dangote Oil Refinery and Petrochemicals by demanding high premium prices for local crude, forcing the company to import crude from distant countries like the United States, incurring higher costs.
Edwin acknowledged the NUPRC’s support, noting that it has intervened several times to help Dangote Refinery secure crude supply.
However, he suggested that Komolafe’s statement might have been misinterpreted, leading to the claim that IOCs were not refusing to sell to Dangote.
“To set the record straight, aside from Nigerian National Petroleum Company Limited (NNPC Ltd), we have only purchased crude directly from one other local producer (Sapetro). All other producers refer us to their international trading arms,” Edwin said.
He explained that these international trading arms act as middlemen, earning margins from crude produced and consumed in Nigeria without being subject to Nigerian laws or taxes.
Edwin recounted an incident where an IOC’s trading arm refused to sell directly to Dangote, instead asking the company to use a middleman who would add their own margin. This situation was resolved after nine months with NUPRC’s intervention.
In August, when Dangote Refinery sought to purchase crude, international trading arms claimed that their Nigerian cargoes were committed to an Indonesian tender, forcing Dangote to wait for availability.
Edwin highlighted that certain crude grades desired by Dangote are often sold to foreign refiners before being offered domestically.
Commending the NUPRC for its interventions and the publication of the Domestic Crude Supply Obligation (DCSO) guidelines, Edwin emphasized the need for transparent dealings directly with local crude producers as stipulated by the PIA.
Edwin also noted that trading arms often offer cargoes at a premium of $2-$4 per barrel above the official price set by NUPRC.
He cited instances where Dangote paid significantly higher prices for Nigerian crude compared to international crude, prompting the company to escalate pricing issues to the NUPRC.
He urged the regulatory commission to address the pricing issue, emphasizing the importance of specifying premiums per barrel to highlight the substantial impact on costs.
