Dangote Refinery Assures Stable Fuel Supply as Global Refinery Shutdowns Trigger Market Shock

Dangote Refinery Assures Stable Fuel Supply as Global Refinery Shutdowns Trigger Market Shock

Nigeria’s largest refinery, the Dangote Petroleum Refinery & Petrochemicals, has assured Nigerians that it will continue to serve as a stabilising force in the country’s energy sector despite growing global supply disruptions caused by geopolitical tensions and refinery shutdowns.

The management of Dangote Petroleum Refinery & Petrochemicals has reaffirmed its commitment to safeguarding Nigeria’s fuel supply amid recent shocks in the international oil market triggered by escalating conflicts in the Middle East and reduced refining capacity across several parts of the world.

According to the company, the ongoing conflict has led to the shutdown of some refineries globally and significant cuts in refinery production, creating a looming scarcity of petroleum products. The situation has been further compounded by a decision by China to halt the export of gasoline and diesel, tightening global supply.

However, the refinery said it is prioritising domestic supply to ensure that Nigeria remains insulated from the resulting supply shocks. It described domestic refining as a critical advantage in protecting the country from external disruptions.

The refinery noted that the crisis has also driven up global crude oil and freight prices, with benchmark Brent Crude rising by about 26 per cent within a short period to above $84 per barrel.

In response to the surge in costs, the refinery announced a measured adjustment of N100 per litre in its ex-depot price of Premium Motor Spirit (PMS), representing an increase of approximately 12 per cent. Despite the adjustment, the company disclosed that it has absorbed about 20 per cent of the cost escalation in order to cushion the impact on the domestic market.

It explained that although it sources some crude locally, all crude purchases are made at prevailing international market prices.

The refinery also revealed that Nigerian crude oil currently sells at a premium of between $3 and $6 per barrel above the Brent benchmark. With an additional freight cost of about $3.50 per barrel, crude oil now lands at the refinery at between $88 and $91 per barrel. By comparison, crude oil landed at about $68 per barrel when the refinery’s ex-depot price stood at N774 per litre.

According to the company, it receives about five crude cargoes monthly from the Nigerian National Petroleum Company Limited, which are paid for in naira but still priced at international market rates plus premium.

However, the refinery requires approximately 13 cargoes per month to meet domestic demand, forcing it to source additional crude from both local and international traders using foreign exchange obtained at open market rates.

The company further disclosed that crude supply challenges have been worsened by the inability of some Nigerian upstream producers to meet supply obligations under the Petroleum Industry Act. As a result, the refinery has had to rely heavily on international traders, who charge additional premiums.

Dangote Refinery emphasised that as a private enterprise operating in a deregulated market, it must align its pricing with prevailing market realities in order to maintain sustainability.

The management warned that selling fuel below production cost would jeopardise its ability to procure crude oil, sustain refining operations and guarantee uninterrupted fuel supply to Nigerians.

Despite the current pressures, the refinery maintained that large-scale domestic refining remains essential to reducing Nigeria’s exposure to global supply disruptions, lowering foreign exchange demand and preventing severe product shortages during periods of international instability.

As part of efforts to strengthen distribution and reduce logistics costs, the company also announced plans to accelerate the deployment of Compressed Natural Gas (CNG)-powered trucks across its fuel distribution network. The rollout of the trucks is scheduled to begin later this month.

The refinery reiterated its commitment to transparency, operational excellence and its long-term goal of ensuring sustainable energy security and stability for Nigeria at an affordable cost.