Dangote Claims IOCs Hike Local Crude Prices to Thwart Refinery

Aliko Dangote, President of Dangote Industries Limited, has accused International Oil Companies (IOCs) of deliberate attempts to undermine the new Dangote Oil Refinery and Petrochemicals by inflating local crude prices. The refinery has had to import crude from as far as the United States due to these alleged price hikes, resulting in increased operational costs.

Key Accusations

Crude Price Inflation: Devakumar Edwin, Vice President of Oil and Gas at Dangote Industries, highlighted that IOCs are selling local crude at prices significantly above market rates, forcing the refinery to import more expensive crude from abroad.
Regulatory Challenges: Edwin also criticized the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) for issuing licenses to importers bringing in low-quality, high-sulphur diesel, which undermines the refinery’s operations and health standards.

Government and Regulatory Context

Licensing Issues: Despite the Federal Government issuing 25 licenses for refinery construction, only Dangote Group has delivered. Edwin emphasized the need for government support to sustain operations and create jobs.
Production and Exports: The refinery has exported over 3.5 billion liters of diesel and aviation fuel to Europe, representing 90% of its production. This move highlights the refinery’s adherence to international quality standards.

Broader Implications

Economic and Health Concerns: The import of substandard diesel from Russia, facilitated by the NMDPRA’s licensing, poses significant health risks and undermines local refinery efforts.
Strategic Efforts: Edwin called for the Federal Government and the National Assembly to implement the Petroleum Industry Act (PIA) effectively to protect Nigeria’s interests and reduce dependency on imported refined products.

Industry and Market Dynamics

International Opposition: Dangote mentioned past attempts by international entities to dissuade him from building the refinery, citing an encounter with Saudi Arabia’s former Minister of Energy, who warned against the venture.
Local and Global Resistance: Dangote acknowledged resistance from local and international cartels aiming to sabotage the refinery project, including attempts to push the project into financial default during the COVID-19 pandemic.

Future Prospects

Local Production Boost: Dangote expressed confidence that Nigeria would cease fuel imports by the third week of July when the refinery begins PMS sales, a significant shift for a country with substantial crude reserves but heavy reliance on imported fuel.

Industry Reactions

Efforts to get comments from the IOCs through the Oil Producers Trade Section of the Lagos Chamber of Commerce and Industry were unsuccessful. Similarly, NMDPRA’s spokesperson, George Ene-Ita, did not respond to requests for comments on the matter.

This development highlights the ongoing struggles and strategic maneuvers within Nigeria’s oil and gas sector, reflecting broader economic and geopolitical challenges.