Alleged Frustration: Dangote Refinery Fails To Secure Crude Supply Chain – Gas Expert

By Impact NGR Last updated Jul 19, 2024

Ademola Adigun, an oil and gas expert, has waded into the controversy over the inability of the Dangote Refinery to access crude oil in Nigeria for its production.

According to Adigun, it was not Nigeria’s responsibility to provide crude oil for the Dangote Refinery.

Dangote Industries Limited had consistently accused International Oil Companies of frustrating crude oil supply obligations to its 650,000 barrels per day refinery.

The Vice President of Dangote Industries Limited, Devakumar Edwin, re-echoed the claims in a statement on Wednesday, lamenting that the IOCs were still selling crude at $2 to $4 per barrel, above the Nigeria Upstream Petroleum Regulatory Commission’s official price.

He also alleged that IOCs preferred selling crude produced in Nigeria to Asian countries.

However, speaking on the developments while appearing on Channels Television’s morning programme, Sunrise Daily, Adigun declared that it was not the responsibility of Nigeria to provide crude oil for Dangote.

Adigun, the former team leader, Facility for Oil Sector Transformation, who is also an expert on Development, Partnership, Policy, Advocacy and Reform, emphasized that like all other business concerns, it was the primary duty of the refinery to secure its supply chain long before going into business.

He said, “I have heard that many times and I have asked people, is it our job to provide crude for Dangote Refinery that is owned by Dangote?

“If you were a land developer and you want to develop a land, would it be my job to provide you land?

“The first thing you do, the first thing any businessman does is take care of supply chain and security. It is not Nigeria’s job to provide him crude.

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“I mean I see a lot of sentiments around the whole thing. A businessman must guarantee his supply chain before he goes into the business.”

On the perennial fuel scarcity, the oil and gas expert said it was caused by the recurrent disruption in the product’s supply chain, just as he described the Nigerian National Petroleum Company (NNPCL), as a victim of government policy.

“I said it before elsewhere, NNPCL is a victim of policy…you know the law says NNPCL must be the importer of last resort to guarantee price and supply.

NNPCL has no option. So NNPCL has the burden of ensuring that there is supply. Whether it is $10 or $25 they buy it and must sell at the government’s policy. That’s why we have these complications,” he stated.

While explaining the country’s commitment to ensuring that local refineries get adequate supply of crude, Adigun disclosed that there is a policy within the framework of the Petroleum Industry Act, PIA, known as the Domestic Crude Supply Obligation, DCSO.

“We have what we call the DCSO Domestic Crude Supply Obligation, under the PIA. Under the PIA, the country must tell all crude sales people that we have domestic capacity supply.

“That is priority number one. Every year, the minister or commission announces what the DCSO is, everybody must get that first before taking anything out. Where we thinking locally that we need 7,000 barrels, that’s the thing everybody must follow, if the commission is not doing that properly, that’s another issue. This DCSO is part of the PIA and it must be done

“Dangote is not part technically of the DCSO, I want people to get this part clear. It is geographically located in Nigeria. But technically, it is not because it is located in an export processing zone.

“Even when you are buying crude from Dangote, buying products, petrol, diesel, you are going to pay in dollars, it doesn’t have supply in the Nigeria market. It can sell to anybody it chooses.”

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