Why international oil firms and local producers agreed to supply Dangote, others crude oil

• Local crude oil producers and international oil companies (IOCs) have agreed to supply crude to Dangote and other refineries
• The development came following a meeting between the Nigeria Upstream Petroleum Regulatory Commission (NUPRC) and the producers
• They also agreed to provide a monthly NUPRC with cargo price quotes on crude supply and delivery to monitor and regulate transactions

Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment, and the economy for over a decade.

The Nigerian government, through the Nigeria Upstream Petroleum Regulatory Commission (NUPRC), has agreed with oil producers to allow the sale of crude oil to local refineries at market prices.

The agreement will end a supply dispute between local refineries and oil producers, including international oil companies (IOCs).

President of Dangote Industries Limited, Aliko Dangote, laments the lack of crude from local producers Credit: Bloomberg/Contributor
Source: UGC

Local producers will begin the crude supply to Dangote.

The oil producers, under the aegis of the Oil Producers Trade Section (OPTS) of the Lagos Chamber of Commerce Industry (LCCI) at the behest of the NUPRC, agreed to yield to a scheme that would mutually benefit both parties and focus on ensuring that local refineries are not starved and ripped-off.

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The parties committed to the agreement at a virtual meeting on Thursday, July 11, 2024, organized by Gbenga Komolafe, the chief executive of NUPRC, with OPTS.

BusinessDay reports that the meeting was part of efforts to implement essential sections of the Petroleum Industry Act (PIA), especially pricing and crude supply to the domestic refineries.

The NUPRC boss said at the event that President Bola Tinubu is fully committed to providing a conducive environment for producers and refineries to do business in the sector.

NUPRC to monitor pricing and transactions

According to him, there needs to be a rule of engagement to ensure that the pricing model of the oil producers is not seen to suffocate the local refineries.

Reports say Komolafe asked the local producers and refinery owners to provide NUPRC with cargo price quotes on crude supply and delivery to monitor and regulate transactions between the parties.

Dangote accuses IOCs of sabotage

In June, the Vice President of Oil and Gas at Dangote Industries Limited (DIL), Edwin Devakumar, accused IOCs in Nigeria of trying to sabotage the Dangote Refinery.

He disclosed that the IOCs obstruct the refinery’s efforts to buy local crude by inflating premium prices above market rates, leading the refinery to import crude from other countries, such as the US.

The 650,000 bpd-capacity refinery is expected to begin producing and distributing petrol this month, ending Nigeria’s dependence on petroleum product imports.

Dangote refinery confirms date for release of petrol

Legit.ng earlier reported that Dangote Industries Limited has reiterated that production of Premium Motor Spirit (PMS), commonly known as petrol, will commence at the Dangote refinery in July 2024.

Devakumar Edwin, vice president of Oil and Gas at Dangote Industries Limited, stated this during a visit by the S&P Global team to the Dangote Refinery in Ibeju-Lekki, Lagos.

Earlier, Legit.ng reported that Dangote refinery set July 10–15, 2024, as the dates for supplying petrol products to the Nigerian market.

Source: Legit.ng