Officials of the Dangote Petroleum Refinery are unaware of claims that seven crude cargoes have been allocated to it in May by the Nigerian National Petroleum Company Limited, The Punch reports.
Senior officials at the refinery told our correspondent that, although talks were ongoing with the NNPC, they could not confirm an increase in the refinery’s monthly crude allocation from five to seven cargoes.
There were reports that the NNPC had increased crude oil supply to the Dangote refinery, allocating seven cargoes for May loading to boost domestic fuel production.
Two trader sources had told Reuters on Tuesday that the latest allocation marked an increase from the five cargoes the refinery had been receiving in previous months.
But speaking exclusively with our correspondent on Thursday, officials of the Dangote Group, who requested anonymity due to a lack of authorisation, said they had not yet been informed of the decision.
According to them, the refinery is expected to receive six cargoes of crude in May, contrary to reports that seven cargoes were allocated for next month.
“Our May allocation is about 6.15 million barrels. The report of seven cargoes’ allocation is not clear yet,” one of the officials stated.
It was reiterated that the 650,000-barrel-per-day facility needs over 19 cargoes of crude monthly, but it only struggles to get five cargoes. A cargo contains about one million barrels.
“Our monthly requirement is 19.77 million barrels. A cargo is one million barrels. In October, we got 4.55 million; we got 6.45 million in November; 4.30 million in December; 5.65 million barrels in January; and 4.66 million barrels in February. March is around six million.
“Our May allocation is about 6.15 million barrels, not up to 7 million,” another official told The PUNCH, appealing to the government to allocate more crude to the refinery.
Earlier, the Dangote refinery had lamented that it was not getting enough crude locally for its operations. As the Iran-US war continues to disrupt global oil supply, the Dangote refinery has effected multiple fuel price increases, raising petrol pump prices above N1,200 per litre.
Defending these price hikes, the Dangote refinery said in a statement that local crude producers were refusing to supply feedstock to its facility, forcing it to rely more on imported crude.
According to the company, the refinery also received just five cargoes every month from the national oil company instead of 13 cargoes, adding that the cargoes were paid for at international market prices.
“While we receive about five cargoes a month from NNPC, which we pay for in naira, these cargoes are priced at international market prices plus premium and fall short of the 13 cargoes which we require to support sales into Nigeria.
“The high crude cost is compounded by the fact that Nigeria’s upstream producers have failed to supply crude oil to the refinery as required under the Petroleum Industry Act, forcing us to source a substantial portion through international traders who charge an additional premium,” it stated.
In an interview recently, sources at the NNPC told our correspondent that the company was working to increase crude supply to the Dangote refinery under ongoing arrangements aimed at strengthening local refining capacity.
They said the national oil company was leveraging its global crude trading network to source third-party supply for the Dangote refinery at competitive international market rates.
“Leveraging our global crude trading network, we are sourcing third-party crude for the refinery at prices that are competitive with prevailing international market rates,” a senior official at NNPC, who spoke in confidence, said.
The official further explained, “As the national oil company entrusted with safeguarding Nigeria’s energy security, NNPC Limited remains fully committed to supporting domestic refining, including the Dangote Petroleum Refinery. Within the framework of our existing agreements, we continue to facilitate crude supply to DRP in the face of temporary availability constraints.”
Meanwhile, as the war in the Middle East rages on, with rising oil prices due to the closure of the Strait of Hormuz, the Federal Government has been advised to sell crude at a fixed price to the Dangote refinery as a means of ensuring high fuel prices do not trigger another inflation.
An economist, Bismarck Rewane, said, “One of the options that can be explored is that the Federal Government of Nigeria agrees to sell crude at a particular price to the Dangote refinery with the assurance that the price of refined products does not increase.”
At the moment, many countries look up to the Dangote refinery for petroleum products, especially aviation fuel and diesel, which are now very costly globally.
(Punch)
