Amid tight supply, Dangote Refinery, others raise local crude requirements to 597,700 barrels per day
…Edo refinery counters NUPRC, NNPC Ltd over crude supply
By Seun Ibiyemi
Dangote refinery and other local refineries have raised their crude oil requirements from Nigeria’s oil producing companies to 597,000 for the next five months. This is according to a statement from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), and reported by Reuters on Monday.
According to the report, Nigeria’s refineries have increased their domestic crude requirements for the second half of 2024 to 597,700 barrels per day, up from 483,000 barrels per day in the first half.
NUPRC also confirmed that the oil companies were only able to provide 177,777 bpd to the refineries in the first six months of the year, way below the requirements of the refineries.
The increasing crude requirements of local refineries, coupled with the challenges oil producers face in meeting demand, have created tensions between the 650,000-bpd Dangote Refinery and the regulator.
Recall that Dangote Refinery accused the NUPRC of failing to enforce the Petroleum Industry Act (PIA) in relation to the domestic supply of crude oil to local refineries.
In a statement released on Friday, the refinery’s spokesperson, Anthony Chiejina, stated that NUPRC has only facilitated the sale of a single cargo between the refinery and crude oil producers.
Chiejina further noted that the regulatory body cited the “sanctity of a contract” as the reason for its inability to enforce its own Act.
“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.
“All we are 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,” the statement read.
Meanwhile, barely weeks after Dangote Industries Limited, the operators of the Dangote Refinery raised alarm about the inability to get crude allocation under the Domestic Crude Supply Obligation (DCSO), another operator has raised a similar concern.
This time, the management of AIPCC Energy Limited, operators of the Edo Refinery and Petrochemicals Company Limited (ERPCL) lamented that it lacks crude oil supply despite being a fully functional 1,000 barrels per day crude refinery.
This countered the position of the Nigerian National Petroleum Company Ltd (NNPCL Ltd) and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) on crude supply to the refinery.
In a chat with journalists over the weekend, the Edo refinery’s representative, Segun Okeni, said the company is yet to get any supply from the relevant authorities — despite President Bola Tinubu’s directive on crude oil supply to local refineries.
He said the firm is facing significant challenges due to the persistent lack of crude supply.
The representative added that the refinery can barely function at full capacity.
Okeni said although the company has existing crude oil supply agreements with Seplat Energy and ND Western since 2022, bureaucratic bottlenecks have prevented the refinery from accessing the much-needed crude feedstock.
He said: “On 18th August 2021, our team led by our chairman, met with the NNPC Ltd CEO and its top management team to discuss our intention to buy crude oil from NNPC Ltd and we immediately wrote seeking crude supply, the letter was dated 22 July 2022.
“In July 2022, the representatives of NNPC (from HQ Abuja and NPDC Benin) visited our facility for site inspection and to confirm the mechanical completion of the Edo refinery.
“In September 2022, we were invited for a commercial negotiation meeting with the NNPC Head of terms, after which we sent a follow-up letter identifying the oil fields from which we can offtake crude oil.
“In March 2022, we also wrote to the Ministry of Petroleum Resources, informing it of our refinery status, future projects and our challenges of lack of crude oil supply to our refinery.
“We had also written and had a meeting with the NNPC Exploration and Production Limited (NEPL) between November 2022 and March 2023, indicating our severe need for crude oil supply from oil fields where NEPL has equity stakes.”
