Devakumar Edwin, the Vice President of Oil and Gas at Dangote Industries Limited (DIL), has accused International Oil Companies (IOCs) in Nigeria of actively trying to undermine the Dangote Oil Refinery and Petrochemicals.
Edwin made this disclosure to a group of Energy Editors at a one-day training programme organised by the Dangote Group.
Edwin stated that the IOCs are intentionally obstructing the refinery’s efforts to purchase local crude by inflating premium prices above market rates, compelling the refinery to import crude from distant countries like the United States, leading to significantly higher costs.
“While the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) are trying their best to allocate the crude for us, the IOCs are deliberately and willfully frustrating our efforts to buy the local crude.
“It would be recalled that the NUPRC, recently met with crude oil producers as well as refinery owners in Nigeria, in a bid to ensure full adherence to Domestic Crude Oil Supply Obligations (DCSO), as enunciated under section 109(2) of the Petroleum Industry Act (PIA). It seems that the IOCs’ objective is to ensure that our Petroleum Refinery fails.
“It Is either they are deliberately asking for ridiculous/humongous premium or, they simply state that crude is not available. 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,” Edwin said.
IOCs failing to meet local demands
According to the Petroleum Industry Act (PIA), international oil companies are expected to meet local demands by supplying crude oil to refineries in the country before exporting.
The Act, which was signed under Buhari’s administration, has been recently reinstated by the NUPRC.
According to the Commission, IOCs are mandated to sell first to local refineries before exporting to foreign countries.
NUPRC said it will serve as a middleman between local refiners and producers when agreements on crude supply cannot be finalized, helping to arrange a sales purchase agreement based on a willing-buyer, willing-seller model.
However, in a recent interview with CNN, Aliko Dangote, chairman and president of Dangote refinery, the IOC are refusing to comply with the mandate, adding that they are not selling them crude oil for processing.
“The NNPC is doing its best, but some of the IOCs, they are struggling to give us crude, everybody is used to exporting and nobody wants to stop exporting,” Dangote said.
What you should know
The Dangote refinery, which is based in Lagos, Nigeria, is the biggest petroleum refinery in all of Africa and Europe.
With a refining capacity of 650,000 barrels, the refinery is expected not only to supply petroleum products to Nigeria but also to other African countries which depend solely on Europe for their energy consumption.
According to the latest report, the $20 billion refinery has started exporting jet fuel to Europe.
While the refinery has begun the supply of diesel to the local market, Dangote said a slight delay has led to the postponement of the supply date to the middle of next month.