….Insists IOCs are frustrating supply
Dangote Industries Limited (DIL) has commended the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) for its various interventions in the crude supply requests from International Oil Companies (IOCs), and for publishing the Domestic Crude Supply Obligation (DCSO) guidelines to enshrine transparency in the oil industry.
Devakumar Edwin, DIL’s vice-president, made this statement in response to remarks by Gbenga Komolafe, chief executive officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
Komolafe in an earlier interview on Arise News had said, “It is erroneous for one to say that the IOCs are refusing to make crude oil available to domestic refiners, as the Petroleum Industry Act (PIA) has a stipulation that calls for a willing buyer-willing seller relationship.”
In response to this, Edwin said, “The NUPRC has been very supportive to the Dangote Refinery as they have intervened several times to help us secure crude supply. However, the NUPRC chief executive was probably misquoted by some people hence his statement that IOCs did not refuse to sell to us. To set the records straight, we would like to recap the facts below.”
He detailed how only one local producer, Sapetro, sold directly to DIL, while other producers directed them to international trading arms acting as costly middlemen.
“These international trading arms are non-value adding middlemen who sit abroad and earn margin from crude being produced and consumed in Nigeria. They are not bound by Nigerian laws and do not pay tax in Nigeria on the unjustifiable margin they earn,” Edwin said.
Edwin recounted an instance where an IOC’s trading arm refused direct sales and insisted on involving a middleman, leading to a nine-month negotiation until NUPRC intervened. He also pointed out that international trading arms prioritize foreign buyers like Indonesia’s Pertamina, often leaving Nigerian refiners waiting.
“The trading arm of one of the IOCs refused to sell to us directly and asked us to find a middleman who will buy from them and then sell to us at a margin. We dialogued with them for 9 months and in the end, we had to escalate to NUPRC who helped resolve the situation,” he added.
He noted that IOCs have consistently hindered the company’s access to local crude, often offering it at a premium of $2-$4 per barrel above the official price set by NUPRC.
In April, DIL paid $96.23 per barrel for Bonga crude, including a $5.08 NNPC premium and a $1 trader premium. In contrast, they bought West Texas Intermediate (WTI) crude at a significantly lower premium of $0.93 per barrel.
Edwin stressed that these prices are higher than market rates tracked by platforms like Platts and Argus, prompting DIL to escalate the issue to NUPRC.
Edwin urged the NUPRC to re-evaluate pricing policies, emphasising that market liquidity is essential for fair pricing under a willing buyer-willing seller model.
Edwin suggested that the current gaps in the domestic crude supply obligation should not prevent prudent measures to ensure fair pricing and supply availability.
“We hope NUPRC addresses these pricing issues to prevent price gouging and ensure a transparent and efficient crude supply system,” he said.
