Dangote Refinery Raises Fresh Concerns Over Domestic Crude Supply

 Dangote Refinery Raises Fresh Concerns Over Domestic Crude Supply

Dangote Petroleum Refinery and Petrochemicals has said it remains committed to sourcing crude oil locally but insists that domestic supplies must be available in sufficient volumes and at commercially competitive prices to sustain refining operations and ensure affordable petroleum products for Nigerians.

The clarification followed recent reports citing data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), which suggested that the refinery rejected 15.5 million barrels of crude oil offered by local producers under the Domestic Crude Supply Obligation (DCSO) framework in the second quarter of 2026.

However, Dangote Refinery said the key issue was not the volume of crude oil nominally offered under the DCSO arrangement, but the quantity genuinely available for purchase under commercially viable conditions.

Group Vice President, Oil & Gas and Fertiliser, Dangote Industries Limited, Devakumar Edwin, said the refinery had consistently raised concerns over the availability of domestic crude and had more recently encountered instances where crude was offered at prices significantly above prevailing market benchmarks.

Edwin said the company remained ready to purchase Nigerian crude, provided it was available in adequate volumes and at competitive market prices.

“Our position is straightforward. We are ready and willing to purchase Nigerian crude oil, provided it is available in sufficient volumes and at competitive market prices,” he said.

According to him, the refinery, like every other commercial refining operation, must procure crude at prices that support sustainable operations and value creation.

He said maintaining commercially viable crude costs was essential to sustaining domestic refining and enabling the refinery to supply petroleum products to Nigerians at affordable and competitive prices.

Edwin explained that since the commencement of the DCSO framework, Dangote Refinery had faced significant difficulties in securing crude supplies directly from domestic producers.

As a result, he said, a substantial portion of the crude allocated under the arrangement had been sourced through International Oil Companies (IOCs) and third-party suppliers rather than directly from Nigerian upstream producers.

He noted that the involvement of intermediaries often resulted in additional premiums and transaction costs, pushing the cost of crude above internationally recognised market benchmarks published by agencies such as Platts and Argus.

“In many cases, this has made domestically sourced crude less competitive than alternative supplies available on the international market,” Edwin said.

He further explained that additional layers of intermediaries could significantly increase crude acquisition costs, thereby affecting the economics of domestic refining.

“When additional layers of intermediaries introduce premiums, the cost of crude acquisition increases significantly, affecting the overall economics of domestic refining. Ultimately, higher crude costs translate into higher costs of refined petroleum products for the local market,” he added.

Dangote Refinery maintained that its position was aligned with the broader objectives of the DCSO framework, stressing that ensuring reliable and competitively priced domestic crude supply remained critical to the sustainability of Nigeria’s refining industry.

The company therefore reiterated its willingness to work with Nigerian crude producers and other stakeholders to improve the availability of domestic crude on terms that are commercially viable and support the long-term development of the country’s refining sector.