The Dangote Refinery has again accused International Oil Companies (IOCs) of frustrating its refinery operations by insisting on selling crude oil through their foreign agents. In a statement, the company said this practice leads to higher prices, with trading arms offering cargoes at $2 to $4 per barrel above the official price set by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
The Vice President of Oil & Gas, Dangote Industries Limited, Mr. DVG Edwin, commended NUPRC for its interventions in the oil company’s crude supply requests from IOCs and for publishing the Domestic Crude Supply Obligation guidelines. However, he urged the regulatory commission to address the issue of pricing, stating that the current practice leads to price gouging in an illiquid market.
Edwin provided examples of how the company was charged higher prices for crude oil, including a cargo of Bonga crude grade in April, which cost $96.23 per barrel, excluding transport. He also noted that the company had to escalate the issue to NUPRC after traders asked for a premium of up to $4 million over and above the NNPC premium for a cargo of Bonny Light.
The full statement reads:
“Dangote commends NUPRC for publishing Domestic Crude Supply Obligation guidelines… Says local price will continue to increase because Trading arms offer cargoes at $2-$4 per barrel, above NUPRC official price… Insists IOCs are frustrating its crude supply demands
The Management of Dangote Industries Limited (DIL) have commended the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) for its various interventions in the oil company’s 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.
Vice President, Oil & Gas, Dangote Industries Limited, Mr. DVG Edwin however said: “If the Domestic Crude Supply Obligation (DCSO) guidelines are diligently implemented, this will ensure that we deal directly with the companies producing the crude oil in Nigeria as stipulated by the PIA.”
Edwin insisted that IOCs operating in Nigeria have consistently frustrated the company’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 $2-$4 (per barrel) premium above the official price set by NUPRC.
…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.
The company alleged that the foreign oil producers seemed to be prioritising Asian countries in selling the crude they produced in Nigeria, saying the local price of crude would continue to increase because the trading arms offer cargoes at $2 to $4 per barrel, above NUPRC official price.
