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Dangote Industry Limited (DIL) has said prices of locally sourced crude oil will continue to rise because trading arms offer above the official price set by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
Vice President, Oil & Gas, Dangote Industries Limited, Devakumar Edwin, made this known in a statement obtained by this reporter in Lagos on Wednesday, July 17, 2024.
Edwin, however, commended the NUPRC for its various interventions in the Dangote Refinery's crude oil supply request from International Oil Companies (IOCs).
He also praised the body for publishing the Domestic Crude Supply Obligation (DCSO) guidelines to enshrine transparency in the oil industry.
He noted that if the DCSO guidelines are diligently implemented, it will enable the company to deal directly with the companies producing crude oil in Nigeria as stipulated by the Petroleum Industry Act (PIA).
Edwin insisted that IOCs operating in Nigeria have consistently frustrated the DIL’s requests for locally produced crude as feedstock for its refining process.
He highlighted that when cargoes are offered to the oil company by the trading arms, it is sometimes at a $2-$4 (per barrel) premium above the official price set by NUPRC.
“As an example, we paid $96.23 per barrel for a cargo of Bonga crude grade in April (excluding transport). The price consisted of $90.15 dated Brent price + $5.08 NNPC premium (NSP) + $1 trader premium. In the same month, we were able to buy WTI at a dated Brent price of $90.15 + $0.93 trader premium including transport.
"When NNPC subsequently lowered its premium based on market feedback that it was too high, some traders then started asking us for a premium of up to $4m over and above the NSP for a cargo of Bonny Light”
“Data on platforms like Platts and Argus shows that the price offered to us is way higher than the market prices tracked by these platforms. We recently had to escalate this to NUPRC”, Edwin said and urged the regulatory commission to take a second look at the issue of pricing.
Dangote accuses IOCs of frustrating its efforts
Pulse had earlier reported that DIL accused IOCs in Nigeria of doing everything possible to frustrate the survival of Dangote Oil Refinery and Petrochemicals.
Edwin made the allegation in June, saying that IOCs are deliberately and wilfully frustrating the refinery’s efforts to buy local crude by jerking up the high premium price above the market price, thereby forcing it to import crude from countries as far as the United States, with its attendant high costs.
On that occasion, Edwin lamented the activity of the NUPRC in granting licences indiscriminately to marketers to import dirty refined products into the country.