The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) made accusations that International Oil Companies (IOCs) would be willing to sell crude oil to domestic refiners. Dangote Industries Limited (DIL) has responded to these charges.
Dangote contends that IOCs are making it harder for domestic producers to have access to oil, frequently requiring them to pay inflated rates and use pricey middlemen.
NUPRC CEO Gbenga Komolafe’s claim that the Petroleum Industry Act (PIA) guarantees a “willing buyer-willing seller relationship” for oil was openly refuted by DIL vice-president Devakumar Edwin.
While just one indigenous producer, Sapetro, sells directly to DIL, Edwin says other producers rely on extraneous non-Nigerian trade arms.
Edwin remarked, “The NUPRC has been highly supportive of the Dangote Refinery, intervening multiple times to help us secure crude supply. However, some persons may have misquoted the NUPRC chief executive, as evidenced by his assertion that IOCs did not refuse to sell to us. To correct the record, we’d like to summarise the facts below.”
He explained in detail how some local producers routed them to international trading arms acting as expensive middlemen, while only one producer, Sapetro, supplied directly to DIL.
“These middlemen in international trade are not adding value; they sit abroad and profit from Nigeria’s production and consumption of crude. They are not subject to Nigerian laws and do not pay taxes in Nigeria on the unreasonable margins they generate,” Edwin stated.
Edwin described a situation in which the trading arm of an IOC refused to sell directly and insisted on using a middleman instead. This resulted in a nine-month discussion until the NUPRC stepped in. Additionally, he emphasized that foreign consumers such as Pertamina of Indonesia are given preference in international trade, frequently delaying Nigerian refiners.
“The trading arm of one of the IOCs refused to sell to us directly and advised us to locate a broker who would buy from them and then sell to us at a profit. We communicated with them for 9 months before having to escalate to NUPRC, who assisted in resolving the matter,” he continued.
He said that although IOCs frequently provide local crude at a premium of $2–$4 per barrel over the official price set by NUPRC, they have continuously impeded the company’s access to it.
YDIL purchased Bonga crude in April for $96.23 a barrel, which included a $1 trader premium and a $5.08 NNPC premium. By comparison, they paid $0.93 per barrel for West Texas Intermediate (WTI) crude, which is a far smaller premium.
Edwin stated that DIL escalated the matter to NUPRC because these prices are greater than market rates monitored by websites such as Platts and Argus.
Edwin emphasized that market liquidity is necessary for fair pricing under a willing buyer-willing seller model, and he asked the NUPRC to review its pricing rules.
Edwin proposed that reasonable steps to guarantee fair pricing and supply availability should not be hindered by the existing gaps in the domestic crude supply obligation.
“To prevent price gouging and ensure a transparent and efficient crude supply system, we hope NUPRC addresses these pricing issues,” he concluded.
