Dangote blames NNPC’s forward oil sales for refinery’s lack of crude

Nigeria’s Dangote Refinery is pointing the finger at the Nigeria National Oil Company (NNPC) Ltd forward crude oil sales for its current challenges in obtaining crude oil to meet refining targets.

According to Olakunle Alake, vice president of Dangote Industries Ltd, the forward oil sales made by the state-owned oil company have created hurdles for securing crude oil for the refinery.

“If there is crude, we will get enough but if you’ve already sold a substantial part of your production forward there will be an issue with supplying current need because you’ve already obtained money against your future production,” Alake said during an interaction with members of the House of Reps and journalists on Saturday.

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“We don’t know the extent of this arrangement to talk about it in detail but we do know there are issues around getting sufficient crude for current operations in the country,” he added.

“We currently have some arrangement with NNPC which is on a case-by-case bases; This means that for every month we seek to purchase crude, NNPC is only expected to give us what they think they have available in a matter of best option.

“There is no contractual obligation that mandates NNPC to give Dangote refinery all that we want every month, they are only expected to give us what they think they have available,” Alake said.

“I cannot say why they don’t have enough to give me; I cannot allude to the fact that they don’t have sufficient because they’ve done forward sales.”

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On August 16, 2023, the NNPC secured a $3.3 billion emergency crude repayment loan to support the naira and stabilise the foreign exchange market.

To make the repayment, the NNPC said it would carry out a forward sale of 90,000 barrels per day of Nigeria’s share of offshore crude oil under the production sharing contract (PSCs) with the oil companies.