Dangote Refinery Clashes With NUPRC Over Crude Oil Allocation

The dispute between Dangote Refinery and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) over crude oil supply took a new turn on Friday.

Dangote Group accused NUPRC on Thursday of not enforcing the Domestic Crude Supply Obligations properly, saying they have not received enough crude oil locally.

In response, NUPRC stated on Friday that they had facilitated the supply of over 29 million barrels of crude oil to Dangote Refinery from January to June 2024.

However, Dangote Refinery in a swift response denied receiving this amount of crude oil.

In a statement on Friday the NUPRC explained that they are committed to enforcing the Petroleum Industry Act, 2021, and supplied crude oil to nine refineries, including Dangote, despite low production.

They claimed to have supplied 32 million barrels of crude oil to local refineries in the first half of 2024, with Dangote receiving 29 million barrels.

“The NUPRC, in its effort to enforce Section 109 of the PIA 2021 has developed and gazetted Regulation of the Production Curtailment and Domestic Crude Oil Supply Obligation Regulation 2023.

“The NUPRC took an additional step to ensure that crude producers furnish the commission with copies of all crude oil sales and purchase agreements entered or any security interest entered, that is tied to crude oil production.

“The commission on several occasions has also engaged Dangote and local refiners to ensure their supply quota is met in line with the provisions of the PIA.

“For effective implementation of the DCSO, the NUPRC established a working committee comprising of NUPRC, the Oil Producers Trade Section, the Independent Petroleum Producers Group, the Crude Oil Refinery-Owners Association of Nigeria and the NNPC Upstream Investment Management Services.”

The NUPRC argued that it had facilitated the domestic supply of crude oil to Dangote Refinery and other refineries using the monthly production curtailment platform.

“A breakdown shows that nine refineries have benefitted from the 32,088,122 barrels of crude as Dangote alone enjoyed 29,047,098 barrels out of the total supply between January to June 2024,” it added.

According to the commission, the Warri Refinery received 949,670 barrels; NDPR-Refinery got 823,395 barrels of crude; the Port Harcourt refinery received 471,123 barrels; the Seplat-WPSOL refinery was allocated 419,541 barrels while the Waltersmith-WSPOL refinery got 296,353 barrels.

Other beneficiaries included the Edo Refinery which got 58,504 barrels of crude and the Du-port refinery which got 22,438 barrels of crude.

It added that in the pursuit of its mandate, if it becomes necessary for licences to be withdrawn, the commission will do so but it will not resort to the ‘presumptuous and arbitrary’ withdrawal of licences because of the sanctity of contract.’

“The regulator as a subject matter expert is of the opinion that arbitrary revocation of licences is not in the best interest of the country particularly in the era of low investment arising from the onslaught in energy transition,” it added.

Dangote Refinery, through their spokesperson Anthony Chiejina, acknowledged NUPRC’s statement but maintained they had not received the crude oil.

The company argued that refineries in Nigeria should buy crude directly from local producers, not international middlemen.

Dangote Group accused international oil companies (IOCs) of frustrating crude supply by insisting on selling through foreign agents at higher prices.

“We are in receipt of NUPRC’s statement that they have facilitated the allocation of 29 million barrels of crude oil to the Dangote Petroleum Refinery and Petrochemicals, we would like to thank them for this allocation but at the same time, we wish to let them know that we are yet to receive these cargoes.

“Aside from the term supply we bilaterally negotiated with NNPCL, so far NUPRC has only facilitated the purchase of one crude cargo from a domestic producer.

“The rest of the cargoes we have processed were purchased from international traders,” Chiejina said.

Chiejina added that all the refinery is asking for is for refineries in Nigeria to buy crude directly from the companies that produce it in Nigeria rather than from international middlemen.

“Unfortunately, the NUPRC has effectively admitted in their statement, that they will be unable to enforce the domestic crude supply obligation as specified in the PIA, citing ‘sanctity of contracts’ as an excuse,” Chiejina concluded.

Vice President of Oil & Gas at Dangote Industries, DVG Edwin, insisted that if Domestic Crude Supply Obligation guidelines were followed, they could deal directly with local crude producers.

He said, “If the Domestic Crude Supply Obligation guidelines are diligently implemented, this will ensure that we deal directly with the companies producing the crude oil in Nigeria as stipulated by the Petroleum Industry Act.”

Edwin insisted that IOCs operating in Nigeria have consistently frustrated the company’s requests for locally-produced crude as feedstock for its refining process.

The Chief Executive of NUPRC, Gbenga Komolafe, denied that IOCs were refusing to supply crude oil to domestic refiners, stating it was a willing-buyer, willing-seller situation.

He said, “It is ‘erroneous’ for one to say that the International Oil Companies are refusing to make crude oil available to domestic refiners, as the Petroleum Industry Act has a stipulation that calls for a willing-buyer, willing-seller relationship.”

The Chief Executive of Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed, said Nigeria couldn’t rely solely on Dangote Refinery for fuel supply, citing issues with Dangote diesel’s sulphur content.

“We cannot rely heavily on one refinery to feed the nation, because Dangote is requesting that we should suspend or stop importation of all petroleum products, especially AGO and direct all marketers to the refinery, that is not good for the nation in terms of energy security. And that is not good for the market, because of monopoly,‘ he said.

President of Dangote Group, Aliko Dangote, denied accusations of seeking a monopoly, highlighting NNPC’s refinery renovations.

KanyiDaily recalls that President Bola Tinubu has ordered the NNPC to sell crude oil to Dangote Refinery in naira.