Dangote refinery gets fresh crude cargoes from NNPCL

The Dangote Petroleum Refinery has received additional crude oil supply from the Federal Government as it was gathered on Friday that large volumes of crude oil shipments were being delivered to the plant as part of efforts to promote local refining.

The supply comes amidst a fresh price reduction at the refinery loading gantry from N825 per litre to N815 per litre. Dealers confirmed the development, stating that the competition in the downstream oil sector had become fierce.

They also noted that the supply of crude oil to Dangote refinery highlights the crucial role of supporting local refining efforts and contributes significantly to domestic refineries’ operations, boosting their production capacities.

A highly-placed source at the Nigerian National Petroleum Company Limited, who confirmed the delivery on Friday, said the crude oil vessels had sailed to the $20bn Lekki-based plant.

“All cargoes have been released to Dangote Refinery, and the vessels have sailed to the refinery,” the NNPCL insider familiar with the development stated in a chat. The source spoke in confidence due to the lack of authorisation to speak with the media.

Another source noted that the cargoes, originally scheduled for delivery last week, were delayed and remained at sea due to uncertainties surrounding the naira-for-crude deal at that time.

Officials of the refinery had yet to respond to enquiries on the matter till this report was filed on Friday.

This latest development follows a meeting of the Technical Sub-Committee on the Naira-for-Crude Policy on Thursday in Abuja, where members gathered to evaluate recent developments, address any emerging issues, and reaffirm their commitment to the continued success and implementation of the policy framework.

The details of the meeting exclusively disclosed to The PUNCH revealed that the NNPC presented a crude delivery report detailing the volume of crude oil allocated for domestic refining under the policy.

The NMDPRA provided a domestic production report covering the Dangote Petroleum Refinery, NNPC Warri Refinery, and Port Harcourt Refinery, while the NUPRC gave an update on crude availability for local refining to ensure a steady supply for domestic refiners. Representatives from Dangote Refinery and NNPC Refineries also provided updates on local refineries.

Earlier, The PUNCH reported that the Nigerian National Petroleum Company Limited initiated fresh negotiations with the Dangote Petroleum Refinery over the renewal of the naira-for-crude agreement, as talks are underway in anticipation of the expiration of the initial deal, which ends on March 31, 2025.

Meanwhile, a major marketer has explained that the stiff competition among the many stakeholders in the downstream oil sector is the primary reason for the ongoing decline in the pump prices of petrol.

The official, who declined to be named, said the pricing competition will lead to a continuous fall of petrol below N800 per litre.

The major oil dealer said, “Prices of gasoline (petrol) have continued to fall and may soon go below N800. The big question is why? Many suggestions are being made as to the reason behind this phenomenon.  Some suggest it is purely local refining capacity. Others suggest it’s the naira-for-crude initiative.  Whatever the cause, it is a welcome relief to consumers and will simultaneously help ease the inflationary pressures in the economy.

“The overriding factor from my perspective is that the falling prices are a direct consequence of competition enabled by the deregulation or liberalisation of the downstream. We had often made this point in arguing in favour of this policy. Unfortunately, many stakeholders, including labour, pushed back, allowing the country to almost go bankrupt before the policy was finally implemented.  We should, however, note that prices can also go up in this deregulated environment.

“The only way to ensure that prices remain at their lowest possible level is to ensure very robust competition in the industry. This means, in particular, that no single entity should dominate the supply to the country. Today, local refineries would prefer that there are no imports. To achieve that goal, they must continuously keep their prices low. The minute you remove that counterbalance, there will be no incentive to keep prices as low as possible. My take is that prices are being forced down because imports are still being allowed.”

He further advised the NMDPRA to “continue to monitor to ensure that only quality products are being imported and, at the same time, ensure that there is a balance between total consumption in the country, local production, and imports.

“Ultimately, local refining of our crude is good for us. However, there must be an incentive for local refiners to keep their prices at the barest profitable minimum through limited and controlled imports. Local refineries also always have the option of exporting excess production to earn dollars.”